You must have been hearing the word Land Banking and probably wondering what Land has to do with Banking. Contrary to popular belief, Land banking is not burying your money on a piece of Land (at least, that’s what some think it is J). Of all the various ways that people pursue real estate investing, one of the most overlooked and underused strategies I know of is the buy-and-hold technique known as “Land Banking”.
What Is Land Banking?
The name implies almost exactly what it is. Rather than putting cash into a savings account (where it will earn a maximum of 1% interest every year) or the stock market (which has become increasingly unpredictable in recent years), some entrepreneurs have taken an alternative approach by acquiring LAND. In doing so, they have chosen to park their cash in a tangible fixed asset – one that cannot be broken, stolen or destroyed.
Vacant land gets ignored by most new investors because let’s be honest – “it just doesn’t sound that exciting”. Unfortunately, this causes most people to overlook a lot of the advantages that land has over traditional real estate investments (e.g. – houses, apartment buildings, commercial properties, etc.)
Why Is Land Banking Overlooked?
Most investors don’t pay much attention to this opportunity because they don’t have patience. People want their money now, they don’t want to wait for decades to realize their gains. It’s an understandable objection to land investing, and there’s no time like the present, right?
But what are your long-term plans? What about retirement? What kind of fall backs do you have when (not if) the stock market crashes? Think 5, 10, or even 20 years from now – what will real estate look like then, and what decisions should you be making TODAY to make the most of the future?
How Can You Start Land Banking?
It is something that major developers and mass retailers have been doing for decades and it happens in every major city. All it takes is for an investor to go in and buy land on the outskirts of a city and then they wait for the population to grow to them. They’re buying property at today’s low prices (before anybody else perceives the value) and they just wait until the city grows to them. When this happens, the land prices spike in value and they’re able to cash in on their land investment.
Many multi-millionaires have been created from this one strategy, and you can do it too. Look for areas that are in the path of growth. These areas exist in literally every metropolitan area in the world and they are often overlooked by the 98% of real estate investors who are only in this game for fast cash. If time is on your side (and let’s be honest – unless you are terminally ill, time is almost always on your side), this is a strategy you should be active in.
Factors to consider before Land banking:
- Level, usable land
- Abundant water supply
- Easy to reach by car, rail and air
- Utilities in place for huge growth
- Close to an ever-expanding metro area
- Current industries growing, more planned
- Existing commercial and residential development
- Studies projecting healthy population growth
- Master plan for streets, roads, sewer, electric and gas
- Proximity to the city
All 10 key indicators must be present to make a land banking purchase.
I hope you now consider Land Banking a thing, at Christal Homes we offer affordable Garden Schemes for Investors. Kindly check out our garden schemes to see which one you can key into. Don’t forget, we have affordable payment plans.