Once you select your market and decide whether debt or equity investing is appropriate, it becomes apparent what type of security to buy or investment to make. Take a look at the following diagram:
If you choose quadrant A, Public Equity, you should purchase real estate securities such as standard equity REITs or publicly traded real estate operating companies.
If you select quadrant B, Private Equity, you should buy direct, ownership interests in real estate properties.
If you choose quadrant C, Public Debt, you would purchase a mortgage REIT, a mortgage-backed securities (MBS) or (Commercial Mortgage-Backed Securities (CMBS).
If quadrant D, Private Debt, is most appropriate, then you would lend money to purchasers of real estate, thereby investing in mortgages.