Land Banking

I recently went to a seminar on land banking, and found it rather interesting. The idea of land banking is not to purchase a piece of land and eventually use it personally (although you could). The idea of land banking is to purchase land "in the path of growth" to be a product added to your porfolio to accummulate wealth, very much like stocks and mutual funds.

Land banking essentially is a speculation on the future use of a piece of land, therefore it is another type of long-term investment in real estate. For example, if there are good indicators an area will have good population growth (let it be a football stadium is being built or the California High-Speed Rail is coming to town), the land around the area will see appreciation over time. And flat lands are probably more desirable than hillier sites.

When we talk about investing in real estate, we usually think about purchasing a rental property. But land can be used in other ways too -- farm land, underground water resources, alternative energy production, or as simple as a developer buys it to turn it into a community.

Do you know you can purchase land with IRA or 401(k)? So if you have money in IRA or 401(k), you might want to consider to diversify and purchase a piece of land (or portion of a larger parcel). If you would like to know more about land banking, please don't hestitate to contact me.