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Property Investment Funds

Why do people invest in Property Investment Funds?

Many of our clients choose to invest in real estate (property). They do this for many reasons (see our Guide to Investing in Property) but, basically, they do it because they believe that real estate offers superb long term investment opportunities.

The problem with investing in real estate is that locating the right real estate can be time consuming, acquiring the assets can be expensive, managing them can be demanding and selling them can take time.

As a result, various types of investment fund have grown up to allow the purchase and sale of real estate assets to be made a lot simpler.

Instead of buying the real estate itself, you buy a share of a fund which, in turn, owns and manages the property.

This is rather like investing in a company which makes its money from the buying, selling and renting out (letting) of the type of land or buildings that appeal to you.

An incidental advantage of such funds is that they are sometimes enormous and can, therefore have very widespread and diversified holdings of property around the world.

There are many types of property investment funds - including REITs (Real Estate Investment Trusts), PUTs (Property Unit Trusts), EPUTs (Exempt Property Unit Trusts), PIFs (Property Investment Funds), PFs (Property Funds) etc. etc.

These are all different in the way in which they have been set up.

Which will be best for you?

Which will be the best option for you will depend upon your personal circumstances and investment objectives.

The International Law Partnership Ltd. cannot advise you about this choice. For this you need (in the U.K.) a suitably qualified Independent Financial Advisor. In other countries you will need to seek the advice of a person who is authorised to give investment advice. In either case, preferably, one who specialises in work involving real estate.

The disadvantages of Property Investment Funds

Property Investment Funds are a very 'hands-off' way of investing in property. Although this is, in some ways, an advantage it's not much fun.

The size of Property Investment Funds, coupled with their regulatory requirements means that they have very high overheads, all of which have to be taken out of the profits generated by the funds before anything is paid to you.

The size of the funds and the number of properties they need to buy to feed the machine may mean that the properties chosen are not necessarily the greatest bargins. This reduces the performance of the fund.

Alternatives to a property investment fund

See out Guide to Property Investment Clubs and, if you are thinking of personal use of a property, our Guide to Fractional Ownership. See also our Guide to Investing in Property.

Next steps

Please look at the Legal Guides, videos, MP3 seminars and other materials set out to the right of this page.

If you would like us to help you, please complete our Client Pack and send it back to us. We will contact you to clarify your requirements and then introduce you to the person most appropriate to deal with your case.

If you do not find the information that you need, please send us an email explaining your problem and we will contact you.

© The International Law Partnership Ltd. Page last revised 8th February 2010