I just felt this should add to our knowledge and equip our Real Estate understanding in talking our clients.
The name “Land Banking” 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, no mortgage payments. A building could even gut fire and if without insurance, it’s a total loss for the owner. A vacant land would be impossible for destruction or loss but rather appreciates on value month after month.
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 in Lands Banking??”
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