With pension returns and interest rates as they stand at the moment people are increasingly turning to property investment to supplement their pensions and as part of a long term savings plan. But for some of us, the idea of becoming a landlord and having the added responsibility of sorting out damages, deposits and tenant problems is incredibly unappealing. Some potential investors may also feel like it doesn't fit into their existing skill set. Even if this is the case, it doesn’t mean that you can't get involved in property investment.

Here are four property-related investments that enable those who are interested to have exposure to the property market:

Invest in a residential property fund

The benefits of investing this way are that the returns are relatively predictable. If you invest in a single house and the boiler blows up this could blow your rental profit in that tax year. However, if you invest in a fund that owns 3,000 houses, the costs are more accurately priced in because the fund probably replaces a boiler every few days. The fund is likely to enjoy economies of scale both in management and repairs that no small investor will ever get near and is able to ensure income flows more efficiently too. The final major benefit is that these kind of funds are appropriate for pension-type investments. This means that if you are one of those people with a SIPP pension you can make this type of investment from your pension fund, which is incredibly tax efficient. Relative to some of the other ways of investing mentioned below, credit risk is low, particularly with regulated funds. 

Buy shares in a national house builder

This is a really straightforward option. If you are investing in a FTSE 100 or FTSE 250 builder these are stable companies. You are likely to have some exposure to these kind of companies via your pension already. They go up and down with the market. For example, in 2011 Bovis was at £4.45, currently it stands at £8.35 a share. When you buy shares, you own a piece of the company and all of its assets. You receive a dividend when the company declares a profit. Do your research first: the companies vary greatly, building for different sectors of the market and regions of the country.

Buy freeholds

The beauty of buying freeholds is that leaseholders cannot really afford to default on their ground rent. Ground rents are paid annually by long term leaseholders. Sanctions for non-payment of ground rent include forfeiture of the property. As leasehold properties unexpired years decrease, the freehold becomes more valuable. This is because leaseholders will have to pay a fee in order to extend their lease. At 80 years or less, the freehold is said to have ‘marriage value’. This means that in calculating the value, surveyors must give regard to the fact that in 80 years leasehold interest will revert to the freeholder.

Practically speaking, this is unlikely to happen as there are laws that enable residential leaseholders to a) force an extension for a sum of money or b) in certain circumstances force the sale of the freehold. If there are 55-60 years remaining most lenders will not regard a property as mortgageable so owners will generally be keen to extend the lease before this point. Most freehold investors will put the management of the freehold with a managing agent and simply collect the annual ground rent, making it a fairly hands off investment. The freehold value will always have some relation to the general value of the property. 

Invest in a joint venture with a small private developer

This is both the riskiest and potentially the most rewarding method of investment. Typically a small but experienced developer will seek funds perhaps to develop an HMO or a medium sized residential development. They will offer a return for private investors. This could take the form of a % return per month or a % of the profits. I’m not aware of any tax benefits for investing in this way. On the upside, a clever developer might make a total return of 30% in a year. The key things to look out for here are security and credit risk. If you are a passive partner in a joint venture it's important to check that the developer has ‘skin in the game’. In other words, check that they have money invested in the venture aswell. It also makes sense that your money is invested as a first charge against land or property. If the development goes wrong you can recover your money from the sale of the land or property. Failure to do this puts you at risk because your money is an unsecured loan. Were the developer to go bankrupt when you were unsecured you would be highly unlikely to recover very much of your investment.