The differences between direct and indirect property investment

The differences between direct and indirect property investment

Direct investment in property refers to when you buy the whole or part of a physical property. As a process, this is not as easy or as quick as investing in equities or bonds, as it requires more time and more capital.
As a property owner you receive rent directly from your tenant, and you can realise gains or losses from the sale of the property. As a landlord you have additional responsibilities for the management of the property. Some of these require specific and specialist knowledge, such as that held by a chartered surveyor. while

Indirect property investment involves investing in the skills and expertise of other people, such as property or fund managers. There are a number of different ways of investing indirectly in property (see the ‘How can I invest in property?’ section). One of the most common routes into the property market, particularly for commercial property, is through collective investment schemes (such as property funds), where investors’ funds are pooled together.

Investors need to be aware that making indirect investments is likely to mean the performance of their investment vehicle is not wholly related to the performance of the property or properties contained within the vehicle. In addition, the tax treatment of indirect investments vehicles may be an issue. You need to be aware of the risks involved, and you should always seek financial advice where required.