Land is one no doubt one of the best gift of Gods to man. As a natural resources, land has produced more comfort and wealth for man than probably any known invention of man. A land simply refers to the solid part of the earth surface.
Land Bannking is the practice of aggregating parcels of land for future sale or development. It could also a short or long term Real estate investment between a Land Developer and Investors which yelds a mutual return on Investement for parties involved.
Simply put, land banking investment is a real estate platform were you invest in real estate project to make profit/interest of up to 35% in a months or year. According to Zylus group, Land Banking Development plans allows investors to reduce risk,improve stability and maximize profits.
The Cambridge Dictionary defines Land Banking as a way of making a profit by buying land with the intention of re-selling it at a much higher price in future or putting it into use for higher value.
History Of Land Banking.
The origin of land banking has been traced ot John Jacob Aston who used this strategy to become the first muiltimillionaire in the United States over 500 years ago. There is also another account of land banking in the mid 18th cenutury in the United Kingdom were in Companies or Investors indulge in accumulation of large expanse of land for future use
Trends in Nigeria shows that the real estate industry keeps appreciating despite inflation and unstable market trends occassioned by lots of socio-economic factors. Nigeria currently has a housing deficit of over 22million, the vast Nigeria population is in vast need of accommodation in both rural and urban areas. This therefore provides a huge opporturnity for Smart investors to tap into and experience a rewarding venture.
Land Banking is relatively new in Nigeria yet,very rewarding and promising for investors. Developers in Nigeria are always in need of the new means of raising capital to finance the very capital intensive Property Market development.
Basically, there are two types of Land Banking Scheme:
Permanent Ownership Land Banking Scheme: Under this type,the investors buy a large expanse of land,usually at low cost with the intention of reselling or retaining it in the future at higher value for investment purposes. The investors looks out for a very cheap land and buys in bulk with a focus on the future.
Temperary Ownership Interest Base Land Banking Scheme.
Here the investor buys or deposit a certain amount of money with a developer who uses such money to trade and then pay the investor a certain specifield percentage upon maturity of such investment. This is usually within the minimum of 6 to 12months peroid. This is the trending part of land Banking were-in the investors gets back their profit annually. It has become a preferred means of investment thats fast replacing the old system of Bank fixed deposit which rarely yields little or no profit.
:Sample of Fixed Deposit Rate among Some Nigerian Banks(Stanbic IBTC3.5% for 90days,First Bank3.5% for 90days,Wema Bank3.75% for90days,Access Bank4.5% for 90days,GTB5.5% for 90days,Sterling Bank 5.25 after 60 days, 5.5% for 90days…..May,2021.
How Does It Work?
The process of land banking have been designed to be swift,seemless and reliable. The Real Estate Developer or Company who here acts or represent the Bank, has existing land products. The investors will buy or deposit certain amount of money ranging from 100,000naira upward to the Developer upon which the Investor will receive and posses vital dorcument relating to the land in question. The Real Estate company will then trade with the money paid by the investor for the peroid agreed. When the investment is due, the Company will pay the Investor the total amount of money invested plus the profit there-in which is based on the fixed agreed percentage.
We Shall Now Critically review some of the key benefits of Land Banking.
High Interest Rate: Some land investment companies even create an avenue for Return on Investment to be upto 45% within 6months. The lowest interest rate you can ever get in a land banking process is 15%. This is in direct contrast to regular bank investment in Nigeria which offers very low interest rate ranging from 0.5-5% annually for fixed deposit investment.
Financial Stability: Land Banking yeilds predictable profit for investors which can be re-invested into other business. Land banking provides passive income for investors thereby ensuring financial stability of investors. Land Banking also gives you a secured investment scheme that yeilds peace of mind and huge return for your investment. In other words, Land baniking is safe and secured means of investing your money in Real Estate. Land is a safe investment that will always be in demand for one reason or the other, so also is the return on investment. All of this means more money for the investor.
Active Money. Land Banking Investment Scheme helps and keep your money working for you. It is often said that a dormant money does not bring money nor build wealth. Rather than dump your money in a stagnant fixed deposit account in the Bank with rare meagre interest annaually, land banking keeps your money actively involve in your wealth building process. Active Money is a quick secret route to Wealth accumulation. In the words of Brian Tracy And Kiyosaki, Active Money brings active income and active income well utitlized nurse wealth creation (Emphasis Mine).
Land Ownership/Value Appreciation: Land Banking can enable you own large scale land for future investment purposes. This is because, it also involves the gradual accumulation of land products which appreciates in value over time. Land often times especially for investment purposes is better owned as a long term investment. Land Banking is a good investment strategy bebause the value keeps increasing while the cost of acquiring land keeps gooing up. An investment in land therefore has a high development potential since your maximum Return on Investment is everly assured.
Wealth Creation: Land Banking enhances wealth creation. Wealth accumulation comes through a consistent application of certain laws of nature based on Seed time and Harvest. This also involves growing your returns easily.Land Banking is therefore a reliable means of building and sustaianing wealth. Get your money actively working for you today by investing in land banking. Remember that wealth is a involves multiple streams of income more so, in the face of prevailing economic realities, you need more money to live your dream life.
My Story.
Some time ago, i came across an Estate in very good location. I did a quick mental accessment of the location and saw it to be very promising with much high appreciation in value. I didnt have the money to but immediate but before then i had invested some moeny in Landbanking so i had to wait. Now, after 6months, my land Banking paid off. The interest i got from the investment which was above 30% was enough for me to make the initial deposit for the Land i had wanted to buy 6months ealier. So, i bought the land with the profit of my investment and then re-invested my capital with Land Banking too, get me more money. Now, by so doing, land Banking helped me finance my land acquaisition process.
Bright Peterside.
Lead Consultant
Lagos Real Estate Broker and Investment Expert
Afri Shelters Ltd