“LAND BANKING” Investment


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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Tyrone is a passionate financial literacy advocate. He started this blog on November 2008 when he watched The Secret which talked about Law of Attraction because he wanted to become a millionaire and wanted to know how a millionaire acts. At the age of 26, he achieved his first million. To find out more about him, click here or follow him at Instagram

42 responses on ““LAND BANKING” Investment

  1. 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.

  2. 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.

  3. 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.

  4. 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.

  5. 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.

  6. 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.

  7. 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 [email protected]

  8. 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……

  9. 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!

  10. 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!

  11. 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!

  12. 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!

  13. 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!

  14. Just a little off topic here. I am glad that you old layout is back, it’s definitely your TM.
    I am officially joining the small percentage of Filipinos that are investing in stock market, TODAY. So I thought I’d check out your stock market tips again.

  15. Hi!

    My family owns an Agricultural Land which, we would like to liquidate. I think Land Banking is the best solution since it is very timely that Angeles City is moving towards a huge progress due to the Airport and the current construction of MRT connecting north and south. I hope you can help me find the right investor to deal with. I am talking about a 19 hectare land in Pampanga, which is very ideal for subdivision or housing.

    Thank you!

    Rho

  16. I strongly recommand you not to invest in Walton International. They have sold many lands in the US but of them have exited. A lot of them will never will.

    Eventhough the land in Edmonton, they control the exit price. They based on their selling price and created an exit offer price that might be only one third of the surrounding price. And the likely buyer is their related lank banking company just out to make another round of profit.

    All their publish return is about 20% and it is based on gross return. But you need to pay tax (min. 22%), commission, exchange fee, 12% per annum mortgage. After all the costs, you might left with few percent or even making losses.

    To get a exit is like striking a lottery, and you need to wait for 9 months to one year to get back your money. So many of the Walton projects are overdue and getting so unpopular among the developers.

    If you put your money in FD, you might get just a few percent return but you can get your money out any time.

  17. That’s true… I’ve learned in my accounting class before that land is one of the best assets because it almost never depreciates. Land banking really makes sense, because I’ve noticed they usually sell agricultural lands for a much cheaper price compared to developed residential ones. It also helps if the area has been planned well and made very sustainable.

  18. Anyone that invests with a land banking company is a fool. 95% of them are total scams. Whatever the say and offer is built on lies. You are ALL buying worthless land although the salesmen of course won’t tell you this.

    Also, who owns the land you’re buying?

    Chances are it’s also the company that’s selling to you!

    You’ve all been warned.

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