If you are an investor searching for income today, you have to start thinking differently from everyone else.

As I mentioned recently the best path to successful income investing is to start with the valuation of the underlying security first. When I do this right now, I find that there are some bargain issues in the real estate markets that are worth considering.

While the larger more popular REITs have had their price pushed up and distorted by income buyers and ETF traders, many smaller REITs are still trading for less than the value of their assets and pay a decent dividend.

Here are a couple:

Cedar Realty

Cedar Realty Trust (CDR) is a great example of a cheap stock that has an attractive yield. The company owns 67 shopping centers between Washington, D.C., and Boston. Most are anchored by a grocery store chain and function as community shopping centers.

CDR have maintained steady occupancy rates north of 90% since 2007 which provided stable cash flows even as the real estate crisis rocked many shopping center related securities.

Since 2011, Cedar Realty management has been selling properties it considers non-core and using the proceeds to pay down debt. They are committed to narrowing the discount to net asset value and gaining more attention from larger investors.

Cedar Realty has made substantial progress with 45 of the 50 non-core locations under contract, already sold or scheduled to be returned to the lender. However there is still a substantial discount to NAV as the stock trades at just 70% of its tangible book value.

CDR stock is yielding 4.1% at the current price and as the economy improves and rents begin to rise once again they will be able to raise the payout in the years ahead.

RAIT Financial

RAIT Financial (RAS) is another real estate related investment that is off the Wall Street radar screen and represents to own income producing assets at a discount.

The company engages in real estate lending,  CRE ownership as well as providing property and asset management services. RAIT funded just over $370 million in CRE loans last year and had $180 million under application as of May of this year in addition to $94 million already funded. They also own about $1 billion of property, primarily multi-family residential properties.

RAIT Financial shares are cheap trading at about 50% of tangible book value. The company is seeing strong operating income growth and has doubled the dividend payout in the past two years.

RAS stock currently yields over 8% for big dividends, and investors can expect that to increase if commercial real estate markets continue to improve. Insiders own more than 15% of the shares and have been buying lately so they believe in the future of the company and are incentivized to increase the dividend and the value of the stock.

Everyone else is buying the ETFs and big well known REITs at 2 and 3 times book value. Smart investors will look to buy the ones that trade for less than asset value and also pay a solid yield.

As of this writing, Tim Melvin was long CDR.