Property Accountants: Land Banking – What is it and why you should do it

Land banking is the process of purchasing raw land with the intention of holding it for future development. When done correctly, land banking can be a very profitable endeavor. Here are some things you need to know about land banking.

What is Land Banking?

Land banking is the purchase of raw land for future development. The land is usually undeveloped and may not have any infrastructure such as roads, water, or power. The intention is to hold the land until it appreciation in value and then sell it at a profit.

Why Bank Land?

There are many reasons to bank land.

First, banks are always looking for safe investments that will appreciate over time. Raw land meets this criteria since it cannot be reproduced and there is a limited supply.

Second, banks can offer loans for the purchase of raw land. This means that you can buy the land without having to come up with all the money upfront.

Third, raw land usually appreciates in value over time. This appreciation can be due to factors such as inflation, population growth, or changes in zoning laws.

Fourth, raw land can be sold quickly if necessary. If you need to raise cash quickly, selling raw land is usually easier than selling developed property.

Lastly, raw land can be used as collateral for loans. This means that you can use the land to get a loan even if you don’t own the property outright.

How to Get Started in Land Banking?

The first step is to find raw land that is suitable for banking. The best type of land is usually undeveloped and located in an area that is growing or has potential for growth. You should also try to find a property that has good access to roads, water, and power.

Once you have found a suitable piece of property, the next step is to negotiate a purchase price with the seller. It is important to get the best price possible since this will impact your profits when you eventually sell the property.

After the purchase price has been agreed upon, the next step is to obtain financing for the purchase if necessary. You can do this by going to your local bank or credit union and applying for a loan.

Once you have obtained financing and closed on the property, your next step is to hold onto the property until it appreciates in value. This could take years or even decades depending on market conditions.

Land banking can be a great way to invest in real estate without having to develop the property immediately. By understanding what land banking is and how it works, you’ll be in a better position to take advantage of this investing strategy.”

Meet the Outside Team!