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“LAND BANKING” Investment

December 12, 2008 by Tyrone
Filed under: Investments 

Land Banking has been one of the most traditional forms of investments. We all know that real estate is one of the best source of income as it appreciates over time.

Personally, I don’t know the term Land Banking until I attended a seminar by the Walton International Group about their business called “Land Banking”. Land Banking is the business of purchasing raw agricultural lands, developing it, and eventually converting its zone from agricultural to residential or commercial use. Doing this will double or even triple the value of the land which will then be sold to real estate developers.

Based on the seminar that I attended, there were three main factors on choosing their strategically located projects and these are: Population Growth, Unemployment Rate, and Infrastructure. Let’s get to them one by one.

Population Growth. Everybody needs a house or a shelter because it is one of our most basic needs. Whatever the economic conditions will be whether be it in a recession or progression, a house or a shelter is needed by a person. And so on choosing the location on where to acquire raw lands and eventually developing it, they study the location with the increasing population growth.

Unemployment Rate. Everybody needs some source of income to provide for their basic needs most especially food. And so on choosing the location of their projects, they consider the one with the lowest unemployment rate. When a company open its plant or facilities, say for example, in Texas, and you are located in Washington D.C. but cannot find a job, will you not be forced to move to Texas at least temporarily? Of course you will.

Infrastructure. The status of the neighborhood is also a consideration. Nobody wants to live in an uncivilized place where there were no nearby establishments like supermarkets, churches, etc. or even as simple as roads except if you are a hermit.

Here in the Philippines, based on the study that we did before, the development of real estate is towards the south especially in the provinces of Cavite, Laguna, Rizal and Batangas areas. Prices of land is increasing and a lot of companies are establishing their facilities in these areas.

If you are thinking of buying your own investment in real estate, consider the three main factors stated above. Moreover, on a more detailed basis, you should also take a detailed due diligence of the property you’re eyeing for.

As Will Rogers say; “Don’t wait to buy land, buy land and wait”.

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Comments

31 Comments on “LAND BANKING” Investment

  1. Susan Kishner on Sat, 13th Dec 2008 12:18 am

    2. Just wanted to say HI. I found your blog a few days ago on Technorati and have been reading it over the past few days.

    [Reply]

  2. admin on Sat, 13th Dec 2008 12:42 am

    3. Hello Susan, thanks.

    [Reply]

  3. john m. ortiz on Tue, 23rd Dec 2008 6:03 pm

    4. You mentioned about Walton International Group. Do they have a Philippine operation? May I know if they have acquired properties in the Philippines already? What exactly is their business here; to whom have they sold properties that they acquired? Thanks.

    [Reply]

  4. admin on Tue, 23rd Dec 2008 6:14 pm

    5. Hi John, first of all thank you for being an avid reader of my blog. To answer your question, based on the seminar that I attended, they don’t have acquired properties here in the Philippines. They are operating here under the name “Priority Wealth International Group” which markets the acquired properties of Walton in US. Currently, they are marketing their Dallas acquired property. They operate much like of a Real Estate Investment Trust or REITs and one unit costs $10,000.

    [Reply]

  5. john m. ortiz on Tue, 23rd Dec 2008 9:40 pm

    6. I am also interested to attend the seminar given by this group, if any in the future. What are contact information that I can use? Thanks for the help.

    [Reply]

  6. admin on Tue, 23rd Dec 2008 10:06 pm

    7. Hi John, you can contact the one who invited me. His name is Michael de Guzman at 09154280677. Tell him that I referred you. Their office is located in Makati Central Business District.

    [Reply]

  7. john m. ortiz on Wed, 24th Dec 2008 1:27 am

    8. Thanks a lot Admin.

    [Reply]

  8. admin on Wed, 24th Dec 2008 3:07 am

    9. You’re welcome.

    [Reply]

  9. ph_investor on Fri, 26th Dec 2008 6:32 pm

    10. One thing my wife mentioned is that we should approach this with caution and as you said, do some due diligence. However, since the investment(the land) is not here, I’m not exactly sure how you can do due diligence for this.

    [Reply]

  10. admin on Sat, 27th Dec 2008 1:59 am

    11. I agree. We should at least have a visit before we park our money.

    [Reply]

  11. Terence Ong on Sun, 4th Jan 2009 6:43 am

    12. Of course, visiting the site is important. You should also check the reputation of the land developer, as this is VERY CRUCIAL especially here in the Philippines

    [Reply]

  12. john m. ortiz on Wed, 21st Jan 2009 5:13 am

    13. I’ve already attended the presentation on landbanking. That company’s business is in a blueprint with projections as to land use and growth potential. There are basically differences in the application of the US and Philippine real estate laws when buying a real estate property classified into landbanking. I have not encountered one yet in the Philippines.

    [Reply]

  13. alan on Sat, 31st Jan 2009 7:34 am

    14. I also attended a talk by Walton & wrote a blog on “What they Don’t wanna YOU to know about Land Banking Investmet” at http://www.alantanblog.com/investment/land-banking-secret-recipes-to-wealth.html

    [Reply]

  14. john m. ortiz on Mon, 2nd Feb 2009 2:56 pm

    15. Alan, your article on Landbanking is very informative… I learned a lot. Thanks.

    [Reply]

  15. admin on Mon, 2nd Feb 2009 7:15 pm

    16. Thanks Alan for sharing your insights thru a link in your blog. My readers like John Ortiz learned a lot from your article.

    [Reply]

  16. alan on Wed, 4th Feb 2009 6:18 am

    17. You are welcome! There are a lot scammer out there!

    [Reply]

  17. Raphnexx on Fri, 13th Feb 2009 12:25 am

    18. Hello!

    This is a hit!

    Thanks for the articles and tips in investment.I learned many things especially in my chosen field -real estate.

    [Reply]

  18. admin on Fri, 13th Feb 2009 1:50 am

    19. Hi Raphnexx, thanks for the visit. You could also recommend my blog to any of your friends. :)

    [Reply]

  19. einar on Sun, 22nd Mar 2009 8:32 pm

    20. nice blog! keep it up! i didnt agree with the development going south part. it has been going south for the past 5-10years. but now, i believe its going north for sure.. reasons why:
    -clark is going to be philippines biggest airport in the future, there is simply no space in metro manila. clark is one of asias largest airbases. and can even land a space shuttle..
    -by clark being the largest airport, expect the largest developments in pampanga. travel time clark-qc is just 1hour 15 by car on nlex. then you have the mrt thats being built wich will make lots of people move to the northern provinces from manila. (this might even become a domino effect)
    -sm clark has half of the mall is inside the economic sone. sm is expanding in the future to a huge marvel when the airport becomes the main international airport. theyre never gonna build a new international airport in cavite or laguna. the problem is, in rush hour it could take you 4-5 hours just to get to laguna from makati.
    -in the past 3 years, ayala land+many more have been seeking for the best properties in pampanga. koreans are signing 12-20year lease on commerical properties near clark.
    -angeles now has the new sm clark, and then the new upcoming ayala mall
    -there is bar developments in enclave angeles where even owners of embassy club are opening a club in may.
    -angeles is a city transferring from shit city to a luxury development area.

    [Reply]

  20. admin on Mon, 23rd Mar 2009 3:57 pm

    21. Thanks a lot for those observations Einar.

    [Reply]

  21. Kate Potter on Wed, 25th Mar 2009 12:22 am

    22. The challenge with land banks is they are a very very long term prospect (8-20 years). The ultimate return depends on the holding costs of the land with most returns gained by the value add ie ultimate development. With infrastructure - roads, water, public transport, government amenitieis etc you can forge ahead with developments in apparently “remote” regions on the basis of “build it- they will come” but such investments (and returns upto 500-1000%) are beyond the capacity of small investors. That’s were the real money is in land banking. obviously demographics and economic growth are key.
    Thanks for the thoughtful discussion
    Kate Potter kpotter1958@gmail.com

    [Reply]

  22. Alex on Fri, 17th Apr 2009 4:38 am

    23. This post is so funny and it looks like 99% of the people haven’t realised that ALL land banking companies are (legal) scams.

    Basically what you’re buying is land which probably has zero chance of getting developed. But of course, the people selling you the land will tell you a very different story.

    People in the UK have lost £100s millions to land banking companies and all of them are left with a plot of land in a field somewhere which is probably worth £500, today, next year and in 10 years time. However, they all paid in excess of £10,000!

    Don’t say you weren’t warned……

    [Reply]

  23. raphnexx on Tue, 26th May 2009 4:27 pm

    24. Hello!

    This is a hit!

    Thanks for the articles and tips in investment.I learned many things especially in my chosen field -real estate.

    [Reply]

  24. mattRjr on Wed, 22nd Jul 2009 10:48 pm

    25. I accidentally clicked on your website when you share a comment on Art Hilario’s blog. At first I was just browsing websites just to get ideas for developing my own website, however, seeing your topics which is more on Business, Investments, Money, etc.I find it very interesting and I congratulate you for that. I will always visit your site. Mabuhay ka kabayan!

    [Reply]

  25. My Top 10 Emerging Influential Blogs for 2009 | Foreclosure Philippines on Wed, 29th Jul 2009 10:02 pm

    26. [...] Acts by Tyrone Solee – I met Tyrone in a Land Banking Seminar last year. One can sense the passion inside of him when it comes to entrepreneurship and financial [...]

  26. Earphone headphones on Fri, 31st Jul 2009 3:07 am

    27. i’m reealyy new with “LAND BANKING” Investment your article give me some clue..thanks

    [Reply]

  27. CondoInvestor on Tue, 18th Aug 2009 12:48 pm

    28. It’s indeed LONGTERM. You can use your money more to other Investment Vehicles if your a starter or newbie in investing but if you have lots of mullah that you can park for 8-15 years, then landbanking is better than banks and TDs. Just don’t forget to do your homework first in this kind of business.

    Know the fundamentals!

    [Reply]

  28. richard pielago on Wed, 14th Oct 2009 9:26 pm

    29. land banking is dangerous in the philippines. in fact, it already destroys us. There are a lots of agricultural areas that has been transformed into industrial parks, golf courses etc. in the end, we ended up with a rice shortages, floods, landslides etc.
    Remember, land conversion in first world countries are protected by laws but in this country laws does not protect anything but the RICH. Land banking will just abuse the mother nature while enriching the big time foreign investors!

    [Reply]

    Tyrone Reply:
    October 14th, 2009 at 10:45 pm

    Somehow, I agree with you on this especially with the current flood brought by Typhoon Ondoy.

    [Reply]

  29. richard pielago on Wed, 14th Oct 2009 9:44 pm

    30. hello investors, please support investment that respect, or much better, that protects mother nature.I hope somebody can provide us opportunities to invest in renewable energies.
    FILIPINO INVESTORS,WE NEED BOTH AGRICULTURAL LANDS AND RENEWABLE ENERGY! NO to land banking BUT BIG YES to agricultural and renewable energy investments!

    [Reply]

  30. Mike on Mon, 21st Dec 2009 10:35 am

    31. All investments come with Risk. The only risk with LandBanking is TIME!….you can wait even up to 20 yrs.

    Scammers will sell you “greenbelt” areas to the unsuspecting investors with forged “Title Deeds”

    ASEAN Govts. should regulate the LandBanking Industry!

    [Reply]

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