Land Banking

 

Land banking is a type of real estate investing where you plan on the appreciation of the long-term hold (sometimes over a decade) as a means to park cash in a tangible asset. Granted, there are some carrying costs, like annual property taxes, but no headaches with Tenants, repairs, or vandalism. During the COVID pandemic, Buyer's demand to purchase land noticeably increased due to wanting to secure some "elbow room" for the future and to make a tangible investment. 

 

Astute land bankers study the market trends to watch the direction of development and new construction, then purchase ahead of the path of growth. They study the needs of communities for more residential housing close to amenities, or business parks, then search for land on those fringes. Or, they take a chance on run-down areas that will inevitably be revitalized. They also consider the potential to produce some cash flow by leasing to farmers, hunters, or big equipment owners needing storage to offset costs during a long holding period. Computer-savvy investors look at the historical imagery (back to 1984) on Google Earth to scope out an area with potential. Note: Google Earth PRO, Historical Imagery is accessed by the clock button on the toolbar or from View > Historical Imagery.

 

Investors also study land use maps, such as these showing how America uses its land: Bloomberg - 2018 US Land Use

 

Map Source: Bloomberg—Dave Merrill and Lauren Leatherby—July 31, 2018