The concept of land banking is fast becoming the new oil in Nigeria. The word implies what it is. Land banking is a real estate investment scheme that entails buying large parcels of underdeveloped land for future sale or investment with a view to making huge profit from it.
Rather than putting money into a savings account or the stock market (which would yield minimal interest and is quite unpredictable), smart entrepreneurs and investors have taken to property acquisition as a means of maximizing returns within a period of time.
Land bankers understand the language of real estate investment, they understand how cities grow and understand that only Real Estate has the capacity to yield best returns with minimal effort and risk.
THE BENEFITS OF INVESTING IN LAND BANKING
Think about it, what safer way to make an investment and viable profit than to buy a piece of vacant land today, walk away from it for about 3-5 years and come back to it to find out that the land is still the way it is with only noticeable traces of development in the area. Wow! Other benefits of land banking are;
- HIGH RETURN ON INVESTMENTS: Land banking can grow up to 5,000 times more in value when done right. When a property is acquired for a minimum amount of money, its value appreciates overtime and is reinvested by the investor which can give a more profitable even double the initial investment amount thereby leading to a high return of investment to the investor.
- LONG TERM FINANCIAL SECURITY: The idea of having a steady flow of income is a positive scope of being a real estate investor. This brings about financial rewards for a long period of time. Real estate investment when done right can provide a stable means to increase wealth over a long period of time.
- INVESTMENT OPPORTUNITY FOR KIDS: To create a safe nest for your kids, what better way to secure their future through an investment plan other than through land banking? It’s Safe, Secure and Trustworthy. In order to add value to their future, land banking is clearly the way to go.
- TAX BENEFITS: Land banking provides tax benefits through depreciation and tax exemptions investors get from owning a rental property. For example, rental income is not subject to self-employment tax. In addition, the government offers tax breaks for property depreciation, insurance, maintenance, repairs, travel expenses, legal fees and property taxes.
LAND BANKING KEY INDICATORS
- Close proximity to a proposed commercial, residential or an industrial hub
- Utilities in place for huge growth
- Can be reached by car, rail or air
- Level usable land
- Easy access to an ever expanding metro city like Abuja and Lagos
- Master plan for layouts, streets, roads, drainages and electricity.
REASONS WHY PEOPLE MISS THE OPPORTUNITIES IN LAND BANKING
- The location: Most bankable lands are situated outside the city and may seem far and underdeveloped. People tend to expect and relate more with ready-made and already developed areas forgetting that every city we see today was a cheap, thick, undervalued forest yesterday.
- The time: Nothing of value is achieved easily, it requires time, effort and nurturing. Time is a key ingredient for land appreciation in land banking. According to Will Rogers, “you don’t wait to buy Real Estate, you buy Real Estate and wait”.
- Procrastination: Everyone wants to own property but most would rather wait for the perfect opportunity, year, month or day. Why do that? Remember, an act of procrastination can make one miss an opportunity when it is easiest.
- Economic reasons: Some people believe the best time to acquire land is when the economy is booming and not during a recession therefore they keep their money in a bank expecting to use it on a rainy day. However, the best period to do this and get the best deals is during an economic recession.
- Uncertainty & Fear: These are common reasons why most people miss out on such great opportunities. It could be political or economic or even caused by the uncertainty of land appreciation rates per year.
- Affordability: Most people have the mindset that lands are too expensive or for the rich alone hence they cannot afford it and also believe they are incapable of saving up to purchase it.
Don’t sit back and watch as others key into this booming aspect of real estate today, remember you can’t lay back and expect exponential results rather get up and move to what moves you forward. This is a perfect opportunity to create lasting wealth through real estate and it’s not determined by your financial or social status, family or educational background or whatever factor you signify as a hindrance. Create a safe nest for yourself and your generations, if you don’t save money the right way when you can then money can’t save you when you need it to.
For more insight, kindly contact Ebenezer Akume, Head of Operations & Human Resource Manager at Next Gear Homes via phone on 08101622244.