The name implies almost exactly what it is. Rather than putting cash into a savings account or the stock market, 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.

2.How Long Has Land Banking Been Around?

This strategy is nothing new. One of the most well-known examples of Land Banking over the past 500 years is John Jacob Astor, who used this strategy to become the first multimillionaire in the United States. He realized the power of Land Banking when he purchased large tracts of land which are now known as “Manhattan”. He acquired this land at a time when nobody else realized the opportunity. At the time of his death, Astor’s estimated net worth would have been equivalent to $110.1 billion in 2006 U.S. dollars, making him the fourth richest person in American history.

3.Why is Land Banking Overlooked?

Most investors don’t pay much attention to this opportunity because they don’t have patience. People want their money now, they don’t want to wait for decades to realize their gains. It’s an understandable objection to land investing, and I’ve made some of my own investment decisions based on the same logic. There’s no time like the present, right?

4.How Can You Start Land Banking?

It’s something that major developers and mass retailers have been doing for decades and it happens in every major city in America. Look at your nearest major metropolitan area and compare what it looks like now, to what it looked like 10 years ago. New neighborhoods spring up all the time! New commercial developments, new industrial parks, new retail establishments, are always being created or revitalized, no matter what the real estate market looks like. All it takes is for an investor to go in and buy land on the outskirts of a city and then they wait for the population to grow to them. They’re buying property at today’s low prices (before anybody else perceives the value) and they just wait until the city grows to them. When this happens, the land prices spike in value and they’re able to cash in on their land investment.

Demand is one thing, but sustained demand quite another. When investing in commercial real estate, you are targeting a specific demographic for tenancy. This makes assessing demand straightforward. When it comes to student housing, for example, there are a number of critically under-supplied cities, where demand will remain high for many years. Despite current demand in other cities, relatively high saturation and a large number of new developments will see demand waiver at some stage in the years to come. This is a crucial aspect of any development as high, sustained demand will ensure that your investment remains attractive in the long-term, maintaining yields, ensuring ease of exit and improving capital growth potential.

2. Is It A Good Location?

It goes without saying that location is a key component of any real estate investment. The same is true for commercial real estate, although the rules are slightly different. A city that is attractive for a residential real estate investing may not necessarily be profitable for things like student housing, self-storage, car parks or other commercial assets. Thorough due diligence must be conducted to deem why a location is able to attract high occupancy and thus high profitability. In addition to selecting a suitable city for investment, it is also important to ensure that the positioning of a development within that city is attractive, with the different factors impact various sectors.

3. Can I Trust The Developer?

Regardless of how good a location might be, if the developer is of poor quality or inexperienced in their trade, the property may have limited profit potential. The available yields in commercial real estate have attracted a lot of new and inexperienced developers, who must be avoided. It is also worth looking at the performance of past developments (ideally in the same sector) in order to ascertain whether they have a good track record.

4. What If I Need Access To My Money?

A flexible exit strategy is an absolutely crucial element in any commercial real estate investment. Although the sustained attractiveness of your investment property is a major element of this, the specific investment conditions you agree to also have a huge influence.Another common investment condition is guaranteed buy-backs. Although these can still provide flexibility, they have to be heavily scrutinized before investing. Any guaranteed buy-back should be based on a tried and tested business model and not mere projections.

5. What Are The Risks?

A key aspect of a successful investment is mitigating risk. In commercial property, this can be achieved by considering all of the above, while also ensuring that contracts are robust and asset-backed (it is common for developers to set up third-party shell companies through which they underwrite guarantees “this is highly insecure, as they commonly have zero assets).” It is always a good idea to consider the worst possible scenario. What impact will this have and what security is in place for you to protect you against it?

We eat food everyday and it is an important part of our culture. Since food is so in-grained in our lives maybe it should also be a part of our investment strategy.Inflation hedging is the main reason why some investors are looking at agriculture. It’s just another way to fight the higher cost of living. And unlike gold, which is also a hedge against inflation, farms have the added benefit to actually generate income.

2)Crop share makes more money for the landlord, but it’s also more risky

farmers will generally pay higher rent if they think the land will yield more crops. The alternative to cash rent as mentioned earlier is a crop share, where after the crops are harvested and sold the land owner gets a share of the total sales, usually about 20% to 30%. In most cases crop share makes more money for the landlord, but it’s also more risky. If the farmer has a bad year for whatever reason (locusts, flooding, etc) then the landlord will share the burden. Cash rent on the other hand pushes all these risks onto the farmer because the landlord still gets paid no matter what happens to the crop’s performance.

3)How to Directly Invest in Farmland?

Farmland investing works the same way as investing in a rental property. You’ll require a realtor, a lender (optional), and a lawyer. Make sure the lawyer you find is from the same province that you’re buying the farmland in because only they have access to the bar in their jurisdiction.

4)Indirect Ways to Invest in Farmland

Another way to invest in the greater agricultural space is to buy shares of publicly traded companies that supply the farm industry. Some examples are Deere (farm equipment manufacturer,) Monsanto (largest seed provider in Canada,) Potash Corp (fertilizer producer.) The average return these companies have returned to their shareholders over the last 10 years is over 700%.

Real estate is not something to do on a whim. Investing in real estate is a life long pursuit to take control of your financial future not a get-rich quick scheme. As an investor you will struggle. You will make mistakes. You will fail. The successful investors are the ones who can take those experiences and turn them into lessons to improve their skills.

2.)You Don’t Need to Be an Expert in Real Estate Investing.

Too many individuals talk about investing in real estate but instead just get bogged down with the vast amount of information out there. Want to know a secret? I only am good at a small handful. People often email me and ask me advice on areas of real estate I know very little about. I try to help as much as possible or at least point them in the right direction, but the simple fact is no one knows it all. You don’t need to be total expert in all things real estate.

3.) You DO Need to Do Your Homework.

On the opposite end of the spectrum are investors who heard about real estate being a great investment and jump in with both feet unsure of where they are going to land. Sometimes these investors get lucky and make it big (and usually go on to be the next big guru) but the majority of the time these investors fall and fall hard. Don’t be like them. Do your homework. Study the niche you want to invest in and learn everything you can about that subject.

4.) As a Beginner, Connect with Local Investors.

You are obviously reading this article, so you apparently know how to read. Do more of this. Check out my list of the Seven Must Read Books for Real Estate Investors and also my follow-up post,Seven MORE Must Read Books for Real Estate Investors. If you don’t like reading – at least learn to listen to audio versions. Books have so much information in them and it’s a shame so many individuals are losing their love of books.

5.) Get Creative.

One of my favorite lines in one of my favorite books, Rich Dad Poor Dad, says “The poor say I can’t afford it.”The rich say “How can I afford it?” I love this. Lasting wealth is built through creativity. (click here to Tweet this quote!) Practice changing your thought patterns from I can’t to how can I in every day life. This simple practice will change the way you view conflict in all areas, including your real estate business. My wife likes to throw this on me when I tell her we can’t afford something she wants. She’s a smart gal.

Forget construction! Forget renovations! You don’t need to be an expert or know anything about how to rehab a property yourself. In most cases, you really only need to know one thing: Is the property suitable for building?As long as someone else can build on the land if/when they want to, a huge part of the battle is already won.

2) Land is a Hands-Off Investment.

Have you had enough of dealing with tenants, toilets, bugs, mold, lawn care, leaking roofs, bursting pipes, broken furnaces, and the hundreds of other issues that come with owning buildings? Vacant land doesn’t involve ANY of those things. Once you buy it, it sits there, it behaves itself, and nothing happens.

3) Land Investors Have Virtually No Competition to Deal With.

Are you tired of dealing with such stiff competition on every property you try to buy? Are you sick of getting outbid on every good deal you’re lucky enough to find? Well guess what there is virtually no competition with land. You see most real estate investors have their minds stuck on: houses, apartments, commercial property, because that what everyone else does. Most investors don’t understand the superior benefits of land and this can definitely play to your advantage.

4) Land is Very Inexpensive to Own as a Long-Term Investment.

When you buy a piece of land for the right price, there are no mortgage payments to make, no utility bills to pay, the cost of property insurance is nominal (if you have it at all) and property taxes are extremely cheap. If you want to park your cash somewhere and forget about it, vacant land could be exactly the investment vehicle you’re looking for.

5) Add Seller Financing to the Mix and EXPLODE Your Income Potential.

When you combine vacant land with the power of Seller Financing, it’s a match made in heaven. It can open up the doors to finding MANY more buyers, because most banks are very hesitant to lend money on vacant land. Due to the scarcity of easy money financing, a land investor can use this to their advantage by charging a higher-than-market interest rate and many people will gladly pay it. Seller Financing is also a great way to create multiple streams of passive income that act like rental properties, but come with virtually none of the typical headaches that rental properties are known for.