What Is Land Banking & How Is It Better Than Traditional Banking?
I just felt this should add to our knowledge in making decision about Real Estate investment amidst the uncertainty of a traditional financial market.
The name “Land Banking” implies almost exactly what it is. Rather than putting cash into a savings account (where it will earn a maximum of 3% interest every year, after you have paid more on charges) or the stock market (which has become increasingly unpredictable in recent years), some smart entrepreneurs have taken an alternative approach by acquiring LAND and in doing so, they have chosen to park their cash in a tangible, fixed asset – one that cannot be broken, stolen or destroyed.
According to Moneysmart.gov.au – “Land banking is a real estate investment scheme that involves buying large blocks of undeveloped land with a view to selling the land at a profit when it has been approved for development.”
Landing banking as an alternative strategy to saving your idle cash in a bank is the process of converting your cash into a physical asset (landed properties) with the purpose of recouping what portfolio and an additional return on price appreciation. The basic step to embarking on land banking is when you purchase vacant land in strategic locations.
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.). Unlike most residential and commercial buildings, land costs virtually nothing to own, no utility payments, no tenant problems, no termite infestations, no leaky faucets, no broken toilets, no mortgage payments. A building could even gut fire and if without insurance, it’s a total loss for the owner. A vacant land would be impossible for destruction or loss but rather appreciates on value month after month.
Think about this, you can buy a piece of vacant land today, walk away from it for 10 years and when you come back, nothing will have changed. Can you think of a safer investment like this?
Also, think about the economics of land, this is a resource with a supply that is always going down (after all, they aren’t making any more of it) and a demand that is constantly on the rise. Given the value proposition that comes with owning land, I often find myself scratching my head and wondering “Why aren’t more investors involved in Lands Banking??”
But before you get started, I’d advise you read this guide on how to know whether a land for sale in Lagos is genuine. This article contains important information on land purchases in Lagos.
For inquiries on how to buy a land at an affordable price with available properties for sale, you can contact our client service centre on +234-808-421-9399