Another way to Invest in Real Estate-Land Banking
When we think of investing in real estate, the most obvious idea is purchase money transactions. Buying a property at very low market value, making necessary and a few cosmetic repairs, then selling the property hoping to realize a return on the original investment, enough to return a sizable profit. Usually this type in real estate investment requires time and attention, two commodities some of us who want to invest in real estate, already have a dwindling supply of.
Some investors choose to keep the investment as a rental property. There again, time and attention is required with rental property, in particular management of the property and the collecting of rent payments each month, not to mention repairs and upkeep.
Land Banking, as an alternative form of investing in Real Estate has been utilized successfully by a few such as Bob Hope, Ted Turner and Donald Trump. Oprah Winfrey recently purchased a large acreage of land. Ray Croc built the McDonald's franchise into the successful model it is today, by starting with owning the land each McDonalds sit on.
What Is Land Banking?
The practice of buying select pre-developed land in the path of growth as an investment, holding it for future use in anticipation of future property development plans, waiting for its value to mature, then selling it for a profit. Basically, buying low and selling exponentially higher.
Who Should Invest in Land Banking as an alternative Investment?
Anyone who is holding 40K or more in an account such as an IRA, SEP, 401K, CD or cash and anyone recovering from a stock market loss. An individual coming into a lump sum of money who wants to create a diversified portfolio might be wise to consider Land Banking. An owner of rental property who is tired of managing properties could liquidate some of those properties and invest in a parcel of land.
Why should an Investor use Land Banking?
1. Land appreciates and it creates generational wealth. It is not liquid, making it more difficult for beneficiaries to go through the inheritance quickly.
2. If you don't care for renters or fixing up property, then Land Banking is an alternative.
3. Buying Land and placing inside a Self-Directed IRA is one way of increasing investment dollars for your portfolio while also reducing your potential taxable income.
4. Looking for a long-term stable investment.
Finally, Mark Twain said, 'buy land, they are not making it anymore."
About Jacqueline Phillips
Jacqueline Phillips is an Insurance and financial Services Representative. She has more than 15 years of experience marketing Annuities, Mutual Fund and other investment products to families and small businesses, representing a diverse groups of insurance companies. email me her at firstname.lastname@example.org.