A couple of new research reports are spotlighting the fact that as house values continue to drop and foreclosures glut many markets, the rental market is soaring. Foreclosures increase the number of renters, and research provided by Reis points out that the current vacancy rate of 4.9% is the lowest since 2001.

As Zillow notes, the areas that have had the worst value declines also saw the greatest rent increases, and foreclosures will likely continue to put a damper on home prices for some time.

All these indicators paint a rosy picture for real estate investment trusts that feature apartment buildings, and investors are taking notice. Here are three that have been performing particularly well over the past year.

AvalonBay Communities (NYSE: AVB) focuses on building or acquiring high-end apartment homes in densely populated areas with a limited rental market and a fairly expensive housing stock. It owns buildings in the Northeast, Washington, D.C., the Pacific Northwest, and California. This company owns 200 apartment buildings, with 19 new communities under construction and 13 currently being renovated. In addition, it owns future development rights for another 32 apartment complexes. Despite slightly higher vacancy rates for part of last year, AvalonBay more than made up for those losses through rate increases, resulting in an 82% increase in profits from the previous year.

Essex Property Trust (NYSE: ESS) concentrates its operations in Southern California, the San Francisco Bay area, and Seattle. The company owns 155 apartment complexes and, like AvalonBay, focuses on areas where there is a dearth of in-demand luxury apartments. Essex has been actively acquiring communities in select California areas for the past several years, and it's quick to divest the trust of those complexes that no longer live up to its strict standards. It appears that its method works very well, as its stock has increased in value almost 18% year over year, and has a reputation for dividend consistency.

Equity Residential (NYSE: EQR) is another large residential apartment rental REIT that caters to the more affluent tenant. Like AvalonBay and Essex, this company also specializes in areas that have high barriers to entry for competitors, and is also, like the other two, fully integrated. The company recently bid to own either part or all of competitor Archstone, which is partially owned by Lehman Brothers, Bank of America, and Barclays, and has been given until later this month to refine its offer. Equity is keen on acquiring Archstone, which features high-rent apartments in tony urban areas. Currently, Equity is the owner of nearly 122,000 apartments in 15 U.S. states, as well as in the D.C. area.

Foolish bottom line
Any or all of these large REITs would do an investor proud, especially with the sunny forecast for the rental market. With REITs, there is the added benefit that requires these entities to pay out 90% of their yearly income in dividends to shareholders; since most of this income is derived from rents, trusts that own and manage luxury apartments seem to me to be the cream of the crop.

If you've ever thought about investing in real estate but are squeamish about doing so by becoming a landlord, rental REITs may be just what you've been looking for.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.