Land banking is the process of buying pre-developed parcels of land, holding land or selling land in the future for a significant profit…
Land Banking can be verified by historical facts and research because ideal land banking parcels or lots are identified and purchased for major metropolitan growth corridors before the new development actually occurs.
Does it matter whether you’re an experienced property investor or just starting out on your property portfolio? What if you’re tired of not being able to control or manage losing money in your superannuation fund?
Purchased land is banked until there is a substantial increase in value because land value increases as the result of demand, rezoning, population growth or municipal expansion.
Land banking key indicators:
- Level, usable land
- Abundant water supply
- Easy to reach by car, rail and air
- Utilities in place for huge growth
- Pre-school to college all nearby
- 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
All 10 key indicators must be present to make a land banking purchase.
The land banking process does not always include making improvements to the land. Investors or individuals can sell land to commercial or residential developers which add value by making improvements to the land.
Organizations engage in land banking for a number of reasons:
- Federal, state and local governments purchase land for preservation or to prepare for future land needs
- Universities and non-profit entities purchase land for future growth or expansion
- Businesses leverage land banking to gain strategic or competitive advantage by retaining development control in critical areas
- Many organizations have an experienced in-house acquisition staff which research and select land parcels to meet their specific objectives…
Government agencies use land banking to support long range civic planning or to support future economic development by leveraging land banking, many municipalities gain and hold ownership of land to be used for new roads, schools, parks or as part of economic or residential development efforts.
Businesses also purchase and hold undeveloped or pre-developed land. A business may purchase land for strategic business decisions or to support long term growth goals. Purchasing land projected to increase in value to the market or to the company is a critical tactical and financial component for many businesses long-term growth strategies.
Individuals use land banking as a wealth creation vehicle to build their retirement nest egg, pay for their child’s or grandchild’s education or to create a personal or family legacy.
Land Purchases should always be secured with a recorded grand deed and title insurance. There is no better way to protect your assets and secure you future because land historically always appreciates over time.
As an investor or individual land banker, perhaps your goal is to successfully utilize land banking as a component of your overall investment strategies. Land banking provides individuals with a managed risk and better alternative to the stock market…
Did you know land value in Melbourne has increased from $88,900 in 2002 to $226,000 in 2012?
Land banking as a tangible asset: Land is real property and has a defined tangible asset value most often protected by a deed. Understanding the variables which go into the true value of shares or bonds is often elusive to even the most experienced investor, especially in turbulent economic times. Land has a historical performance as stable, reliable investment, principle is a managed risk.
Land as a commodity: Increasing populations and sprawling cities make land a hot commodity around the world. Hungry corporations and developers purchase open real estate for future commercial, retail and residential use. This continued projected growth makes land a high-return investment when value spikes on the leading edge of the development.
Land banking added value: Land is determined by use and land banking is a calculated assessment for a plot of land which is worth more in the future as the market pressures for its use increase.
Unimproved land which is not accessible via major transportation grids and/or not zoned for commercial or residential development is worth significantly less than land located next to the interstate and zoned for commercial retail.
As roads are built and zoning is changed, the value of the land grows. Land banking can be used to lock in future profits via supply and demand, based on the more accurately an investor can calculate the path of development and its impact on the value of the land.
Land banking development: Competitive developers and investors use their understanding of the development and growth path to purchase land which ideally can be developed in the future by studying demographic patterns, transportation funding, geographic limitations, and civic leadership to assess where and when that land is needed.
Banking or holding land in this development path is where land banking potentially delivers the highest return on the investment.
Land banking in Australia: The demographic and economic pressures which drives the value of land in Australia are the same around the world. Paths of development are driving up land values near every major city. Successfully banking the land is the process of strategically purchasing, holding, and selling via research, knowledge and access.
Land banking investment strategy: There are many reasons why individuals, businesses or government agencies engage in land banking. For individuals it can be a critical strategy to achieving their overall investment and wealth building goals.
Want to learn how land banking is used as a retirement strategy, funding a college education or as a legacy building strategy?
How can you use land banking to pay for my child’s college education? Land banking is an excellent way to save for a college education. If you or your newborn’s grandparents invest $30,000 today in land at a conservative 20% annual return, in 18 years your child has access to nearly $800,000 to apply toward his/her educational goals.
Why use land banking instead of other investments? Land banking is not a new investment strategy and for many investors because of the tangibility of land as an asset it makes sense in terms of investment time frame in their investment goal and portfolio.
What if there was a land banking strategy which helped reduce holding costs associated with traditional property investing, for example interest costs of holding land, council rates, land tax, up keeping or maintenance, while making money and profits via capital growth of the area?
Land is real, right? Is your goal to achieve significant personal wealth or at least to be financially comfortable, whatever your definition of comfortable may be? What’s your next step?
Want to know how to secure land for a small deposit via land banking strategy using almost no holding costs, little or no finance needed for 4-10 years depending on your current finances and still be able to get capital growth?