Land Banking
Land banking has been around for a few decades. I only found out about it recently when I went for the investor talk. It was at the same location I found out about oil and gas investment. What landbanking does is to select big parcels of agricultural land that are near developed areas before they are rezoned into commercial land. Typical waiting period is 4-7 years, depending on location, and minimum profits guaranteed by the company are the doubling of the initial amount.
Land banking used to be reserved for large institutions or corporations, but now, it is made available to smaller investors. The minimum amount to get in is US$10000. When I saw one of the projects, Her Majesty the Queen is one of the investors. Of course, she is not the actual person doing the investment, but the portfolio is managed by the experts.
First of all, a land banking company will do a thorough research on various plots of land. They will send their teams in for 2 to 3 years before going through with the deal. The acquisition team will only end up with 2 to 3 possible plots out of 50 that they initially looked into.
They will look at various categories, such as the politics and economy, the growth statistics and other legislation. Then they will look at the official plan and the approval process. If there are no plans for the state to expand, then it’s not viable. Then, they will start looking at the ownership of these lands. The areas should be near major transportation infrastructures and booming towns. The cost of entry should be low as well. They will tend find the receptive sellers and check their title deeds. After everything is done, they will swoop in and give them little time to consider.
What the company will do next is to come up with a master plan to propose to the state government and then ask for rezoning of land. The land will be subdivided for commercial, housing, parks, and schools and other needs. The land banking investor does not need to worry about the particular lot that he or she receives, because each investor holds equal weightage.
When developers come into the picture, the company will look at the prices and the process becomes similar to enbloc. They need more than 60% agreement. By then, the prices should have doubled. Some properties may earn more than others. According to the sales consultant I met with, her company’s worst project received only 8% per annum. The best projects received 45% or more per annum, but the usual projection is 12-15% p.a.
Of course, there are risks and other considerations to land banking. I’ll address them again.
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Great article… but there are various landbanking co. with various investment structure and location. Which co. are you referring to?
http://www.landbanking.us
Hi thelandbanker. I’m refering to Waltons. I think you wrote about them in your website as well.
[…] Land banking in US still attracts a sizeable crowd. I did not meet the sales consultant for a few weeks, and she told me the project she had introduced to me was more or less sold out. She then introduced another project in Texas to me. I promptly bought it. […]
Edgeworth offers Land Banking opportunities in oil rich province of Alberta, Canada, where there are housing demand but not enough supplies due to the booming oil industries. Edgeworth offers Land investment adjacent to existing housing development with Exit between 2 to 5 years. Investment comes with Edgeworth guarantee buy back returns and principal protection by insurance company. Upon zoning approval and after Clients’ Exit, Edgeworth convert the Land into service lots and sell them back to the Canadians for more profits.
I meet up with a Walton Rep at a Show at Expo on Friday and was shocked from what they told me - They have sold over 50,000 acres to investors.
I said to him if this land were developed into housing you could house over 20 million people !!!!! Thats a third of Canada population!!! I think that they are making money by selling land marked up $$$$ not by selling land suitable for development how much can farm land cost in canada C$500-2000 per acer max
I suspect they are making fake exits by paying off a few investors to prove they have a viable busness model.
How can thousands of acres of farm land become homes ????
Stay away
Tim
Gday guys
Anyone with any info on Royal Siam Trust and their land banking project in Trat we’re all ears. The good the bad the ugly, any info, comment or 2 cents would be appreciated. Did have a look, asked and no one knew nothing as we asked around or they simply shrugged their shoulders. Noticed one guy, a one man band asset manager in Japan brokering www.meyerjapan.com these so called units. As we know, you can own less 50% of land in Thailand. Looks like this thing (collective investment scheme) is 4 years old and it has a distinct bad small already. My best guess is an offshore shell company selling a fib offshore to outside investors and they must represent the actual Thai land owner. Did a bit of research and it reeks of an offshore illegal rogue fund. Units aren’t cheap at over $21,000 for 250 sqm (the math says they have 1660 of them). The land prices are questionable in this area and at least 10 years out of what they are claiming on their site. These poor folks are paying for charter jets, boats, self audits and in house appraised pieces of land. Looks bloody treacherous and if anyone has info please feel free to post.
their site www.royalsiamtrust.com
Cheers
Tim
50,000 acres for 20million ppl? The area of Singapore is approximately 171,000 acres…
I think Tim’s 20 million people from 50k acres might be off by a factor of 10, but still, the number is big.
I have met the people from Walton and suspect that their pricing is rediculous. Clearly, they are the ones making the money (and they should be entitles to a profit, just exactly how much seems to be the issue.
On the very next day after meeting the walton guys, I had a call from what was clearly a boiler room http://alwynmanagement.com/ flogging MPD Development Corp (MPDD). An internet search showed no blog of Alwyn. I know these guys change their name all the time…
The stock has had a grand total turnover in 2 months of 600 lots. This stinks.
Beware!
Regards
Andrew
Hi Andrew,
maybe your right 20 million would be 400 people per acre like HDB. Any way i still thinks its risky. My main point was the canadaian population growth increase needed to build these homes. Which dose not add up.
PS: Beware of www.landwealthcentre.com its selling the same land as Land international Far East which has just been closed down by the FSA in the UK.
www.propertyscam.org.uk www.landintfe.com www.oilestates.com
Tim
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