REtipster provides real estate guidance – not taxes or investment advice. This article shouldn’t be interpreted as financial advice. Always seek the help of a licensed financial professional before taking action. To get a house and turn it for a revenue at the earliest opportunity. To buy a house and build a dependable way to obtain passive income.
Both strategies are completely legitimate, time-tested methods that have created a lot of wealth for a lot of people in real estate. However, of all various ways that people pursue real estate investing, one of the most overlooked and underused strategies I understand of is a buy-and-hold technique known as “Land Banking”. What is Land Banking?
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The name implies almost precisely what it is. Vacant land gets overlooked by most new traders because let’s be honest – it just doesn’t sound that exciting. Unfortunately, this causes most visitors to overlook a lot of the advantages that land has over traditional real property investments (e.g. – houses, apartment buildings, commercial properties, etc.). Unlike most residential and commercial buildings, land costs virtually nothing to own… no utility obligations, no tenant problems, no termite infestations, no leaky faucets, no broken toilets (and if you buy it the way I do), no mortgage repayments.
Think about it… you can purchase a bit of vacant land today, walk from it for a decade and when you come back away, nothing shall have changed. Is it possible to think of a safer investment? And take into account the economics of land… this is a resource with a supply that is always going down (in the end, they aren’t making any more of it) and a demand that are constantly on the rise. Given the worthiness proposition that comes with owning land, I often find myself scratching my head and questioning “Why aren’t more investors associated with this?
How Long Has Land Banking Been Around? This plan is nothing at all new. One of the most well-known types of Land Banking within the last 500 years is John Jacob Astor, who used this strategy to become the first multimillionaire in America. 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 right time when nobody else recognized the opportunity.
110.1 billion in 2006 U.S. Why is Land Banking Overlooked? Most traders don’t pay much focus on this opportunity because they don’t have patience. People want their money now, they don’t want to wait for decades to understand their benefits. It’s an understandable objection to land investing, and I’ve made a few of my own investment decisions based on the same reasoning. There’s virtually no time like today’s, right? Perhaps – but think about the long-term?
What kind of fall backs are you experiencing when (not if) the stock market crashes? Think 10, 20, or even 30 years from – what will real estate look like then now, tODAY to make the most of the future and what decisions should you be making? Consider it… imagine if you had bought land in these areas BEFORE their explosions in growth? How Can You Start Land Banking?