What is Land Banking and Why Should You Be Doing It?
If you’re like most real estate investors, you’re probably pursuing this business with one or two primary goals in mind:
Both strategies are completely legitimate, time-tested methods that have created a lot of wealth for a lot of people in real estate. However, of all the various ways that people pursue real estate investing, one of the most overlooked and underused strategies I know of is a 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 and 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.). 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 (and if you buy it the way I do), no mortgage payments.
Think about it… 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?
And 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 with this?”
How Long Has Land Banking Been Around?
This strategy is nothing new. One of the most well-known examples of Land Banking over the past 500 years is John Jacob Astor, who used this strategy to become the first multimillionaire in the United States. He realized the power of Land Banking when he purchased large tracts of land which are now known as “Manhattan”. He acquired this land at a time when nobody else realized the opportunity. At the time of his death, Astor’s estimated net worth would have been equivalent to $110.1 billion in 2006 U.S. dollars, making him the fourth richest person in American history.
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 I’ve made some of my own investment decisions based on the same logic. There’s no time like the present, right?
I suppose – but what about the long-term? What about retirement? What kind of fall backs do you have when (not if) the stock market crashes? Think 10, 20 or even 30 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? Just take a look at a few examples of when land banking really made sense…
Think about it… what if you had bought land in areas such as Lekki Phase 1&2 VGC, Park View, Garki, GRA (Government Reserved Area) phases 1—5, Elekahia, Rumuomasi, D-line, Elelenwo, Iboloji, Ogbunabali, Rumuola, Diobu, Woji, Amadi Flats, Umuchitta, Rumuokoro and Borokiri. BEFORE their explosions in growth?
How Can You Start Land Banking?
It’s something that major developers and mass retailers have been doing for decades and it happens in every major city in Nigerian and across the world. Look at your nearest major metropolitan area and compare what it looks like now, to what it looked like 10 years ago. New neighborhoods spring up all the time! New commercial developments, new industrial parks, new retail establishments, are always being created or revitalized, no matter what the real estate market looks like.
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.
If you need a guide on how to securely Invest in Land Banking Smartmax Realty Limited will be glad to help, it is our primary duty. We will guide you on how you can pay for these properties conveniently.
Today you can purchase lands in places like Ibeju lekki for a paltry sum of N1.5Million, and allow it appreciate and sell for a reasonable sum of N5million in 3 years Interval.
For more Enquiries contact us on: 08053642425, 08059916925, 07066991129
Residential and commercial buildings: The idea is that you can basically rent, sell or even develop the land depending on your financial expectations and ability. Renting out the land and allowing a residential building to be constructed means you’ll be getting a steady income and increase the land’s value because of the property built. Selling the land to commercial or residential investors for added value after some years is another option.
Developing land, however, is the least common because of its extreme costs, some develop land massive enough for commercial properties. A perfect example of that would be a small shopping mall.
Farming and livestock: Many land owners who buy their estate in rural or suburban areas have the attractive option of renting it out for many years for farming purposes. This serves two main purposes for a land owner, generating money from rent and from appreciation.
2. No Depreciation
The fact that land has no depreciation value is another reason that makes it a great real estate investment strategy. Land can’t have a depreciation value because simply it can’t be destroyed, moved or affected negatively under any circumstances, natural or unnatural. So when investing in land, an investor is able to rely solely on appreciation, worst-case scenario.
3. No Competition
This is a true fact because lands are different in sizes, location and even shape that you can never find the same exact land. Compare that to property owners who have to work hard to fight off competition in their market. If you are going to buy land, then you will find it easier to acquire it without going through the process of bidding with other competitors.
4. Limited Management Issues
The major difference between owning land and residential property is that land doesn’t need any maintenance or attention while properties require a lot of work and time. To be profitable in land purchasing, the most important criterion is that the land has to be suitable for construction. For investors who are too busy to deal with tenants, maintenance and managerial issues, then land is a great strategy for making money in real estate passively.
5. Land Is Scarce
The thing about land ownership is that you will be the owner of an investment that is considered limited or rare. We are running out of land. With overpopulation around the world, empty lands are becoming even more limited with every passing year.
6. Cheaper Expenses
Finally, is land owning a lot more expensive? Owning a vacant land has the lowest expenses in real estate investments because you avoid utilities, pay fewer taxes and fewer mortgages considering that you purchased an empty land.
Land as a real estate investment strategy is possibly one of the best options out of there for people who are not cut out for the hard work of residential real estate properties. The huge risk that lies with buying land is the consequence of not being able to rent out the land. As with any real estate investment, vacancies hurt profits and cash flow. Moreover, if the land was bought with the intention of having a tenant build a property, then you will have to construct a property to rent, which is very costly. Another risk that can come with land purchase is the extreme shifts in value – the value rates can rise extremely slowly or sky-rocket in a week. Nevertheless, if you are looking to add into your dimension of investments with something new, then land ownership is the thing for you.
HERE ARE REASONS WHY YOU SHOULD INVEST IN IBEJU LEKKI TODAY
Get over 200% appreciations per annum: This is how high your investment would appreciate; the net-worth of your investment within a short period after you key into what you never saw as a goldmine. In addition, the location enjoys 40% of total construction activity in Lagos, continuously driving higher demand and price.
According to current market price, a plot of land at Gems Ville Estate will likely sell over N5 million per plot by 2022.
Right Choice: Gems Ville estate anticipates population growth; therefore it is important you go where the world is going. 15% annual population growth rate of the area surpasses other major locations across Nigeria.
Guaranteed ROI: In every investment it is important you stay where the market blossoms. Gems Ville estate is close to the New International Airport, The 4th Mainland Bridge Dangote Oil Refinery & Deep Sea Port, 10 minutes drive from Eleko beach junction and 35 minutes drive from Ajah. How promising can an investment get?
Unequivocal Environment: Gems Ville estate offers you a chance to be surrounded by premium housing estates and fun sites. Imagine having Eko tourist beach, the popular La champagne Tropicana and even a golf course as neighbours. Your status just moved overboard.
Own the next Dubai: Located within the New Lagos Megacity, Lekki Free Trade Zone, in which the Government is investing over N400 billion.
Beautiful Landscape: Uptown Courts eliminates any doubts of flooding as it is seated in an upland landscape. You need not worry about sand filling or deep rafting.#Gemsville#GemsvilleEstate#SmartmaxRealtyLimited#SmartRealEstate#SmartRealEstateInvestment#RealEstateInvesting#IbejuLekkiLands#IbejuLands#LekkiLand#GenuineLands#DryLand#Dangote#DangoteRefinery#DeepSeaport