1.What is Land Banking?
The name implies almost exactly what it is. Rather than putting cash into a savings account or the stock market, 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.
2.How Long Has Land Banking Been Around?
This strategy is nothing new. One of the most well-known examples of Land Banking over the past 500 years is John Jacob Astor, who used this strategy to become the first multimillionaire in the United States. He realized the power of Land Banking when he purchased large tracts of land which are now known as “Manhattan”. He acquired this land at a time when nobody else realized the opportunity. At the time of his death, Astor’s estimated net worth would have been equivalent to $110.1 billion in 2006 U.S. dollars, making him the fourth richest person in American history.
3.Why is Land Banking Overlooked?
Most investors don’t pay much attention to this opportunity because they don’t have patience. People want their money now, they don’t want to wait for decades to realize their gains. It’s an understandable objection to land investing, and I’ve made some of my own investment decisions based on the same logic. There’s no time like the present, right?
4.How Can You Start Land Banking?
It’s something that major developers and mass retailers have been doing for decades and it happens in every major city in America. Look at your nearest major metropolitan area and compare what it looks like now, to what it looked like 10 years ago. New neighborhoods spring up all the time! New commercial developments, new industrial parks, new retail establishments, are always being created or revitalized, no matter what the real estate market looks like. All it takes is for an investor to go in and buy land on the outskirts of a city and then they wait for the population to grow to them. They’re buying property at today’s low prices (before anybody else perceives the value) and they just wait until the city grows to them. When this happens, the land prices spike in value and they’re able to cash in on their land investment.