Land Banking And Guaranteed Returns: Five Benefits You Should Know

For anyone exploring the real estate investment space, you have one or two main objectives in mind when you pursue this business:
• swiftly purchase a house and sell it for a profit.
• to invest in a home and establish a steady passive income source.
Both methods have a proven track record of success in real estate investing and are 100 percent legal. A more original approach is known as “Land Banking” and it is one of the most ignored and underutilized methods in real estate investing.

Basics Of Land Banking

Land banking is pretty much what it sounds like when you hear the term. Some businesspersons have chosen an alternative strategy by purchasing LAND and storing their funds in a meaningful, fixed asset that can’t be broken, stolen, or destroyed. By doing this, they are choosing to forego the annual interest rate of 1% that savings account offer or the stock market, which has grown increasingly unreliable in recent years.

Because vacant land does not sound fascinating, the majority of new investors overlook it. Because of this, a lot of would-be land investors fail to recognize several benefits that land investments have over more conventional investments in real estate (e.g. apartment buildings, homes, commercial properties, etc.).Unlike the majority of homes and businesses, the land is quite inexpensive to own. No mortgage payments if you purchase it the same way I do, and no energy bills, tenant issues, termite infestations, faulty faucets, or broken toilets.

When you buy a plot of undeveloped property today and leave it for ten years, the value of the land increases even without any additions. Hardly will you find a safer investment option that guarantees you returns and retains the value of an asset over a long period
The economics of land should also be taken into account. This resource’s supply is constantly falling but its demand is always rising because they aren’t manufacturing any more of it. When you consider the perceived value that comes with possessing a piece of land, you may find yourself wondering, “Why aren’t their more people involved with this?

DUBAI 1991

DUBAI 2015

Background of Land Banking

This tactic is not brand-new. John Jacob Astor, who employed this tactic to become the first multimillionaire in American history, is one of the most well-known examples of land banking in the last 500 years.

When he acquired the vast swaths of land that are now referred to as “Manhattan,” he came to understand the power of land banking. He purchased this land when no one else saw the possibilities.

Astor would have been the fourth richest person in American history if his estimated net worth, which at the time of his death would have been $110.1 billion in 2006 currency, had been realized.

Benefits

1. Requires little startup money

The least expensive sort of real estate is typically vacant land. Several payment options and sizes are available from as little as 250sqm to 1000sqm.

A property’s value doesn’t start to rise until growth and development take place in the immediate environment of the land. As a result, starting this business just needs a little amount of initial money provided you know where to seek amazing property prices.

2. Increase in the value of the land

Insofar as the value keeps rising, land banking is a wise investment strategy; this is true everywhere. As can be seen, the price of buying land never stays the same and seldom ever decreases. One of the resources with a chance of increasing in value over a longer time frame is the land. The investor will receive the highest profits if they invest in land with a high potential for development at its present or lower market value.

TOKYO 1945

TOKYO 2015 

  3. The cost of owning the land as a long-term investment is lower.

In some developing areas of the nation like Ibeju Lekki (Vedura), Epe (Lagos state), and others, the land is comparatively cheap and plentiful (Abuja).

By purchasing this vacant land, you can enter the real estate industry more easily and affordably as a wise investor.

Land banking is a sort of investment that you can utilize when purchasing a piece of property at the proper price to keep your funds stashed for a while. In the background, your asset discreetly increases in value while costing you next to nothing.

  4. It is a limited resource.

The fact that land is a limited resource is one of the main arguments in favor of investing in it. There will still be residential development high rise construction, but there is a finite amount of land that can be purchased.

  5. Less opposition

There is little competition in the property investment niche. The majority of investors (especially those with large amounts of wealth) are concentrated on the flashy and glamorous parts of real estate investment, such as condo projects, house flipping, multi-unit properties, and condo towers. The lower level of competition you will experience is a huge advantage if you’re wanting to purchase undeveloped land.