Land Banking – Buying Land Today for Future Resale
Land banking is an investment business practice of buying land today and plan to resell it in the future when the value in an area has appreciated. The concept may also entail securing land now and plan to develop it in the years to come when the area has developed. The whole notion of land banking is aimed at making profit from the property after some time.
Things you need to know about investing in land (land banking):
You don’t need to do anything physical to the land
With land banking, your work is to buy land as it is and wait. As the land is appreciating in value, your only obligation is to ensure that it is safely guarded against trespass or encroachment. You can do this by making frequent visits to it, fencing it, doing some casual agriculture onto it, keeping bush off it and some many other uncostly practices. As time elapses, visible developments will start coming into the area and this means value appreciation on the side of your land.
Buying Land is a ‘hands-off’ proposition
Investors often don’t have an easy task in letting out their properties. Rent arrears, damages, tenants abandonment, relentless maintenance or even just increasing expenses – all these things can be demanding and have a big financial effect. The list goes on with owning multiple residential buildings. With vacant land, you don’t experience any of these issues. But once you buy the land, it sits there and you get none of the above challenges.
You face virtually no competition
When buying land, there is less competition because most of investors are buying what every other investor is buying like houses, flats and commercial property. Most investors are too scared or they simply don’t know how to make money from land and this can definitely play to your buying advantage. It is more interesting when you buy land in areas which are considered undeveloped.