What is Land Banking?
Simply put, it’s the process of buying and holding unimproved real estate. Land banking is done for a number of reasons. Local governments can engage in it in order to preserve stretches of land or to have the option of changing their use at some time in the future. Individuals also utilize land banking as a potentially very lucrative investment. Over the years, more than a few fortunes have been realized by way of land banking. Investors who understood the concept of purchasing at very low prices raw land that could later be developed became quite wealthy. But it hasn’t ended; that same concept still works today. And with the current real estate bubble continuing to burst all around us and affecting virtually every category of ‘improved’ properties, investing in undeveloped land is proving to be a very sound financial decision. A cornerstone principle of land banking is the notion of the land’s use, not only now, but in the future as well. Unimproved land can easily be purchase with o
In most countries, land is a hot commodity due to sprawling cities and commercial development. Open land is often consumed at a dizzying rate by cities and developers hungry for space to build more housing, retail and office space. In anticipation of future development, investors and city, county or state governments may purchase and hold land that is vacant, rural or underutilized at a relative bargain before its value skyrockets once it eventually falls in the path of development. This practice is called land banking. When land banking is used by a city or county government, or even a not-for-profit agency, it is typically to retain some control over the future development of a particular area. Some cities have been particularly aggressive in keeping suburban sprawl at bay, and use land banking to preserve green space, or to halt growth altogether. Land banking may also be used for cities and counties to exert control over how the land is developed, by controlling if it is zoned for
Land Banking (land investment) is the practice of acquiring land and holding it for future use. Land banking opportunities for the small investor are increasingly popular. Of particular interest are plots in exceptional locations in countries and areas with strong predicted growth, particularly where the investor can choose whether to build or simply hold on and wait for the asset to appreciate in value. Historically, countless fortunes have been made in Land Banking by individuals who understood the concept of buying and holding pre-developed land in the path of growth. They did nothing more than buy and hold land in growing regions. Imagine buying land on the outskirts of London, New York, Tokyo at prices 50 years ago and what it is worth today. Today it is land banking in the emerging markets such as Brazil which will bring the investor the most profits.
Land banking is the practice of purchasing land with the intent to hold on to it until such a time as it is highly profitable to sell it on to others for substantially more than was initially paid. Land is becoming increasingly popular as an investment due to the benefit of its being a tangible asset as opposed to stocks or bonds. The consistent increase in the value of land, also called appreciation, is what makes land an ideal alternative to the stock market or other paper securities. This type of investment has gained such popularity it is now possible to land bank worldwide and there are several firms set up to offer opportunities to do so. Land in the Path of Growth Parcels of land desirable for “Land Banking” are those that lie directly in the growth path of rapidly developing cities. The Investor’s goal is to buy undeveloped land that will increase in value because it lies in the path of urban growth. The key is to identify these parcels well in advance of the developers and wai
