Land Banking

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LAND BANKING IS AN ASPECT IN THE REAL ESTATE SECTOR THAT HAS BEEN KNOWN BY FEW FOR DECADES, A GOLDMINE YET EXPLORED, BUT RECENTLY GAINING POPULARITY IN NIGERIA. THESE VERY FEW THAT HAD PRIOR KNOWLEDGE ABOUT LAND BANKING, HAS MADE FROM IT A LIFELONG WEALTH. TODAY, I WILL BE DISCUSSING ON WHAT LAND BANKING IS, AND HOW YOU CAN USE SAME TO BUILD WEALTH.

Land banking is the process of acquiring future real estate development sites at today’s prices. Today’s prices are foreseen to be lower than what they will be in the future. Accordingly investors hope to profit by selling their already secured land for greater profits down the line.  Another aspect of land banking is buying vast expanse of land in an undeveloped area for a cheap sum, keeping the land for a couple of years, then putting it up for sale when development has gotten to such area snowballing the price it was bought. This aspect of land banking is very common in Nigeria.

The name implies almost exactly what it is. Rather than putting cash into a savings account (where it will earn a maximum of 1% interest every year) or the stock market (which has become increasingly unpredictable in recent years), some entrepreneurs have taken an alternative approach by acquiring LAND and in doing so, they have chosen to park their cash in a tangible, fixed asset – one that cannot be broken, stolen or destroyed.
This strategy has enabled many developers to strike it rich, especially in locations such as Abuja, Lagos and Abeokuta; where real estate prices have risen considerably over the years.

For you to have a better understanding, think of land banking as your normal banking system which entails depositing money and receiving interest on the money saved either through a fixed deposit account or a regular savings account. The difference between your normal banking system and land banking could be better explained in this chain. For your normal banking system, you receive a token on interest compared to the amount you saved in the bank.

IN LAND BANKING, THE AMOUNT OF INTEREST YOU RECEIVE AFTER SAVINGS IN A LAND IS USUALLY DOUBLE THE AMOUNT SAVED. FOR EXAMPLE, FLOATING or investing five(5) MILLION NAIRA IN AN INTEREST YIELDING ACCOUNT CAN ONLY AVAIL YOU 7.5% PER ANNUM; BUT BUYING A PROPERTY FOR five(5) MILLION NAIRA CAN FETCH YOU fifteen(15) MILLION NAIRA OR MORE IN THE SUCCEEDING YEAR, AT NO COST.

So many people in the world have built wealth through land banking. Example are the likes of Ooni of Ife, Oba Ogunwusi (before he became Ooni of Ife), Folorunsho Alakija, Otunba Wale Akinboboye of Lacampagne Tour and Resort, Chief Emmanuel Oyedele Ashamu, George Washington, Donald Trump,  With an estimated personal net worth of $16.4 billion, Donald Bren is one of the wealthiest people in the world. As of August 2019, Forbes ranks him as the richest real estate developer in the United States; Sijibomi Ogundele, Tayo Oyerokun etc. Basically Land Banking Churns out millionaires every year and has made billionaires over the years.
Considering economics of land, a resource which has a supply that is always going down (after all, there isn’t any more of it being made) and a demand that is constantly on the rise. Given the value proposition that comes with owning land, I often find myself scratching my head and wondering “Why aren’t more investors involved with Land Banking??” Seeing that this is a golden opportunity, Speak to us today (by reaching out to us today at aridanhomes.com for more information you could also mail us; info@aridanhomes.com) to get you started on your drift into into LAND BANKING.

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