Land Banking (1)
Land Banking is a practice that dates back to the primitive era and had been developed over the years to a point that some developed countries have made considerable legislation to legalize the practice of land banking, like the United States in the 1960s.
In this series, we will consider what is involved in land Banking practice, the benefits and the risk involved in Land Banking practices, and how to manage the risk to maximize the benefits of Land Banking in subsequent piece in this series.
What is Land Banking?
The word “banking” is a practice of keeping valuables or Fiat money in a safe that is either control by the keeper (Saving Box) or a licensed safe keeping service provider like the commercial banks, mortgage bank or other financial services institutions for the purpose of savings or as an investment to yield returns over a period of time for future use.
Land Banking then, is a practice of using financial resources, barter system or agreement between two or more parties (the owner and the buyer) to acquire landed properties either in smaller units over a period of time or in large quantity with the purpose of holding such lands for a period of time for it to appreciate in value so to generate returns to the buyer.
This practice means the buyer(s) decides to use his money or other bankable skills or services to acquire lands in bits or large quantity depending of capabilities and holding such lands for it to appreciate in value over a period time as against keeping such money in the commercial banks or other financial services institutions for a max interest yield of 7% per year depending on the banking jurisdictions.
The lands acquired could be in developed areas of a city, or less or non developed parts of country sides and the main objective is to hold the land for such a time that the land will make reasonable appreciation in value like 2x, 3x or more from the initial capital investment.
Time have also proven that lands that were acquired in less developed area that later a saw a rapid development boom became far more profitable compared to those around already developed areas because of the rate of value appreciation.
In our next article on this series, we are going to consider the various types of land banking practices and their benefits.
Please enjoy your read and stay tune for upcoming updates.
You can also visit https://farmchain.finance to sign up as member of the Farmchain Finance Coop with lots of benefits like instant 2 square meters of land in our prestigous Estate as a member
