Why land banking is an ideal estate investment
In the real estate business there are many real investment strategies. But one of the ideal real estate investment strategies that is always under looked in preference of traditional real estate investment is land banking. What is land banking? Land banking is a real estate investment strategy where investors buy small or large quantities of undeveloped land with the aim of profiting from resale of these lands.
Most investors try to ignore vacant lands in preference for investment in other traditional land investment in real estate of building commercial houses, residential and rentals, but some of these vacant lands are in path for areas of growth and investing in them through land banking can translate into ideal investment vehicles.
In land banking an investor seeks or looks at an underdeveloped neighborhood and banks it until there is substantial infrastructural development or population growth in the area before selling it for a higher price or developing it to meet the growing demand.
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In a developing city like Mbarara City and other neighboring developing towns there are always new developments including commercial buildings, rentals and residentials and so if a potential investor thought of investing in land banking in the outskirts of Mbarara City and other growing towns as growth and development expands then you will be assured huge benefits because here land prices will increase highly.
Land banking is always a better investment because land always appreciates and because at times this land may be in areas not yet developed when development begins to take place, there could be mad rush for land here infrastructural developments like roads, health facilities, schools, hotels and hospitality business, rentals, residential and commercial houses. An example in Mbarara City is along the Mbarara by-pass where previously undeveloped areas are attracting huge investments and in case you invested in land banking here you will be now earning handsomely.
Land is a resource whose supply is always going down and demand increasing and therefore investing in land banking will always remain one of ideal investment potential. But also you can use this banked land to carry out other investments before its value appreciates. You lease it out or mortgage it in the bank for a loan to carry out other investments. You carry yourself invest in it for example using it for farming. But you have to also be careful on the investments or activities you are to carry on this land before reaching your original investment plan because it may be damaged.
Whereas land banking is good investment opportunity, you need to careful, carry out research and background check on the type of land you are going to bank because it may also has risks and challenges like any other investments for example you might bank land in an area with laws and regulations prohibiting certain forms of developments (zoning restrictions) which will affect future resale or development.
Some lands may be prone to environmental and climatic effects like flooding, soil erosion that can make this land difficult to attract future investments. Some lands are also threatened by land grabbers. Land banking also needs patience that is why some investors tend not to put their money here, and end up missing this ideal investment opportunity.
But using services of a professional realtor like at Amity Realtors ltd where we always employ professionals and experts in land matters to carry out research, background and due diligence on all our lands we are investing in and putting on the market can reduce such kinds of risks.
But also at Amity Realtors ltd we also invest in solving the puzzle of land economics that is identifying growing and developing areas and buying land in the path of growth, so when you approach any land investment idea like land banking you will be sure of high returns.