The real estate industry is a very lucrative one with so many investment opportunities for people to take advantage of. But many people are unaware of these opportunities and miss out on them. One of these not so popular investment strategies is called Land banking.
Land banking is a real estate investment strategy that requires a lot of patience as the returns are not seen immediately. However, the profit made at the end of the day is usually worth the wait.
What is Land Banking?
Land banking is an investment strategy that involves acquiring landed properties and storing for future reselling. Just like saving your money in a bank account for future use, what is being saved in land banking is the land itself.
Many investment companies partake of this investment platform by purchasing undeveloped land and saving it for future purposes. When the need for any development project arises, they can easily access the previously purchased land to carry out the project. They can also decide to develop the land for in-house use or to sell to individuals for residential property investment. This has to be done with required approval from the government.
Some investment companies use the land for agricultural purposes. If the land is confirmed to be fertile and good enough for farming, they can lease it out to farmers for a certain period of time and at an agreed price.
Check out Land Sizes in Nigeria
Is Land Banking a Good Investment?
Land banking is one of the best investment platforms in Nigeria because it is secure and has the tendency to produce high returns. Land is a tangible asset that cannot be destroyed and is always appreciating in value. Real estate prices are always increasing and this means more profit for companies who have acquired land or property at a cheaper rate. This means they can resell at a higher price due to the ever changing market trends.
The price is even higher when the land is developed. With a structure already erected on the land, its value increases and the price is bound to be much higher. Also, land management is not as expensive as property management as there are no maintenance fees to pay or repairs to be made.
How to Invest in Land banking in Nigeria
When investing in land banking in Nigeria, you must be particular about the location. In real estate, having a good or bad location can make or mar the returns you stand to get from your investments. There is no point in buying land in a neighborhood or environment that would make it difficult for you to resell.
Different factors sum up to determine whether a location is good or not such as proper road network, security, presence of basic amenities like good power and water supply and so on. You should carry out proper investigation before deciding to buy any land for land banking, else, you might run at a loss.
Read more on Importance of Location in Real Estate
Land banking can be done by an investment company and also by individuals. It only depends on the size and affordability of the land. There are so many untapped areas in cities such as Lagos and Ibadan where you can purchase land at an affordable rate. If you are looking for where to invest money, land banking is a good investment platform to do so.
MKH Investment is a real estate company that provides various services such as real estate consultancy, property development, facility management. We also have a number of properties available for investment. You can contact us here for more details.