Steering clear of land banks? It’s time to change your thinking.

Steering clear of land banks? It’s time to change your thinking.

Land banks – government entities or non-profit corporations – are a growing trend in the US and there are now over 120, each dedicated to returning vacant, abandoned and tax delinquent properties to good use.

The reputation of the neighborhoods managed by land banks and strict ownership criteria means that land bank properties are often overlooked by real estate investors. But land bank properties can be a personally and financially rewarding investment – for both organizations and individuals.

-Group investors

Each land bank has their own policies on re-sales. Some only sell to non-profits, while others will work with for-profit developers. You’ll have to align your plans to their own for that particular community – so if their focus is affordable housing, don’t expect to be able to buy up smaller properties for demolition and replace them with one larger home.

-Individual investors

Not all land banks sell to individuals, so check whether your local corporation is open to this. Although property is often sold at a bargain price, the buyer has an obligation to bring it up to local building code standards. For some purchases this can be a big commitment and it’s vital to view the property – often sold as seen – before purchase. Don’t get carried away by a rock-bottom asking price!

Finally, a note of caution for the adventurous. Land banking outside of the US usually refers to private real-estate investment schemes – and are often a con. Land is sold at inflated prices, with the promise that once planning permission has been granted, the land can be sold on for a good profit. In reality, there is often no development potential and investors lose their money.