Q: We recently received an advertisement from a real estate broker saying that we could make a return in excess of three to four times the current passbook rate and get an excellent tax shelter by using the present equity in our home to buy "proper" investment property. Can I really do this?

A: Almost without exception, people in what I suspect is your financial situation are not making a current return in excess of 16 to 21 percent on relatively small real estate investments. In fact, the portfolios I've seen of invstors in single-family rental residences are either showing no current return or only a very small current return.

Some investors are even having to put additional money into their property (after rental income is received) to meet their obligations for mortgage payments, taxes, and other current expenses they're required to meet. What they hope to do is to get a good overall return by selling the property, after holding it a few years, at a much higher price than they paid for it. Some have been able to do this. Some have not.

To get an accurate "current return" from your overall return, you have to discount your later yield back through your ownership period to the yield's "present value." This is somewhat complicated. And you need a good deal of qualified advice (which isn't usually free) if you get into this.

You'll be able to shelter some of your taxable income because you're allowed to depreciate the rental house and other improvements (but not the land) over its economic life, on your tax return. Your tax adviser can explain the details.

Q: I'm hearing more and more about mortgage-backed bonds and mortgage pass-trhough certificates. Can you tell me what they are?

A: Simply put, a mortgage-backed bond is a debt instrument that is an obligation of the issuer, usually a savings and loan association. It is secured by a pool of mortgages. You look primarily to the financial strength of the issuer for payment. Only in case of failure or default of the issuer do you look to the ability of the individual mortgagors (the homeowners) for payment.

A mortgage pass-through certificate gives you a direct, undivided ownership interest in a pool of mortgages. You look to the ability of the individual mortgagors only for payment. There's no intervening issuer (such as a mortgage-backed bond) to assume primary liability. The individual homeowners have primary liability to pay.

Q: My finance and I wish to buy a house within the next year. Our combined income is $21,500. My husband-to-be is a Vietnam veteran and would qualify for a VA loan. We wish to buy a house in Montgomery County and would prefer an house that is 25 to 35 years old.

Do you think we'd be better off buying a town house for our first plunge into real estate? Should we buy a new one?

A: In your price range - with your income you could probably afford a $54,000 house - you might have better luck buying an older house that needs some fixing up. I also suspect that you may be able to find a town house that might suit you if you stay in the Maryland area where you are living now.

Shop carefully. July and August are good months in which to buy, as are November and the first half of December.