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”.