Direct property investing refers to purchasing, owning, renting, managing, and selling property for profit and returns. Direct property investment is any real estate investment held either directly through direct ownership on the title or indirectly through collective ownership vehicles like managed property investments. Direct property investments may be residential, commercial, industrial, retail, or any other property asset.
What Does Direct Property Investment Look Like When It Comes to Rental Properties?
So what does direct property investment look like when it comes to a rental property? In the rental property world, direct property ownership would be a landlord structure in which the property owner deals with tenants and handles all of the property’s needs. That would include ongoing maintenance like landscaping, trash, etc. It would also include any issues that may arise with the property. For example, if the toilet is broken, the landlord is responsible for getting a plumber to repair it.
Responsibilities in Direct Property Investment:
- Pay mortgage
- Maintain proper insurance
- Make sure you’re following safety codes
- Collect rent from tenants
- Repair services for anything wrong with house/property
- Ongoing maintenance and utilities (landscaping, trash, etc.)
This style of ownership has several advantages and disadvantages. The benefits are that the landlord has more control over what happens with their property. They can oversee the day-to-day management of the property, and they’ll know right away if something needs work or something has gone wrong. At the same time, direct property investment in a rental property can be a disadvantage, as it places all of the responsibility on the landlord and owner of the property.
What About Indirect Property Investments?
The alternative to direct property investment is indirect property investment. Indirect property investment is when someone owns a property but is not involved in the daily maintenance and management of that property. That is also known as “passive property ownership.”
Many people opt for this type of investment. It allows them to make passive income from their rental property without dealing with the everyday responsibilities of maintaining a property directly. That also makes it a good choice for people who purchase an investment property in another state or far from where they live.
With that said, people who choose to have indirect property investments tend to have less knowledge of any problems or issues that arise with their properties and, therefore, less control over their property. For investors who want more control over their investments, indirect property investing may not be the best choice.
Which Investment Is Best for You? The Bottom Line.
Deciding whether you should make a direct property investment or indirect property investment depends mainly on the level of control and involvement you wish to have with these properties. If you want to have ongoing participation and oversee daily management, direct property investment is a better choice. If you’re going to have less responsibility for the property or live far away from it, indirect property investing may be a better option.
