One of the best and easiest ways to create wealth: Landbanking
Posted by: Paul T. Robertson in Real Estate, tags: Real EstateLandbanking involves buying pre-developed land at a low price and then holding it until the value of the land has increased. The first step is to research the market in the area. What you want to buy is land which is in the projected path of growth of a major urban area. The idea is to buy this land before a lot of other investors begin to take interest in the area.
A lot very wealthy people made their fortunes in Landbanking; among them are Howard Hughes, Donald Trump and Bob Hope! With some cities going through rapid growth, the time to start Landbanking is now.
One benefit of Landbanking is that you can buy this land and then you are in no hurry to sell - you can sell either when it has reached prime value or when you are ready to retire. Landbanking can be a great way to ensure a comfortable retirement.
As you can guess from the examples given above, there is a lot of money to be made in Landbanking. These investments can be more lucrative than other property investments or even stocks. All other investments have cyclical ups and downs, while land tends to increase in value over time. As long as you buy wisely and choose property that lies in the path of growth for an urban area.
If you choose an area which is not located in this path, the return on your investment will be far less. Remember that you’ll likely need to hold onto this property for a long time; but if you don’t want to sit on this land for a long time, there is another way to use Landbanking.
This method is simply to purchase a piece of land that is not being used to its full potential. You buy the land for much less than it is potentially worth being used as it currently is. Next, you change the lands use.
For example, let’s say that you buy land which is currently occupied by a commercial building. If you can have the land rezoned as residential, you can sell this land to a developer for a housing development, which will get you a much better return on your investment; the developer stands to gain far more by using this land for residential purposes than by selling just one commercial building.
The key to both types of Landbanking is to see the land what its future use will be and not what it currently is. You must also keep in mind that profit is made at the point of purchase but only received at the time you sell. Do not overpay for your land. The more you pay the less you will make in the end.
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