The Value of Land Banking
Have you ever seen a property and thought it would have been a great investment had you gotten involved a few years back? If people only knew how much value a property could have after a few years, they would likely get involved as an investor sooner. Fortunes have been made with Land Banking.
If you’d like to possess a property with hopes it will appreciate over time, then Land Banking is an area of real estate to look at. This is a process of acquiring future property development sites now, at the present value (speculating the increase of value in the coming years).
Numerous property development enterprises purchase large pieces of land and place them in their land bank. This assures them that they will have enough land available for future property developments or parcel sales.
Even though big profits have been generated from holding a bank of land by numerous developers, there is also a flip side. Land Banking has caused the ruin of some developers when the values of the banked real estate declined. As always, take these risks into account.
When land banking, you’re basically banking on
- The fact that you think the value of the land will increase over time.
- In due time, you could very well move forward with a property development plan.
- Sell the property at a higher value.
Land Banking is a good investment method. The value of land can appreciate every year. You can even decide to build on the land to further increase its value.
Land banking, much like the buy and hold strategy, takes time. But, that time can also lead to an increase in value and a greater ROI for you as the investor.