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Land Banking Land BankingIn most countries, land is a hot commodity due to sprawling cities and commercial development. Open land is often consumed at a dizzying rate by cities and developers hungry for space to build more housing, retail and office space. In anticipation of future development, investors and city, county or state governments may purchase and hold land that is vacant, rural or underutilized at a relative bargain before its value skyrockets once it eventually falls in the path of development. This practice is called land banking. Land Banking is a proven long-term appreciation strategy for building wealth and providing individuals with a safe and profitable alternative for building their retirement nest egg. But, successful land banking requires planning and patience. Patient land bankers will consistently find good properties at good solid values. There is never a need to impulse buy or over pay.
Land is becoming increasingly popular as an investment due to the benefit of its being a tangible asset as opposed to Shares or Bonds. This type of investment has gained such popularity it is now possible to land bank worldwide and there are several firms set up to offer opportunities to do so. Land banking can also be utilized by private investors who take a risk on what is usually cheap, undesirable property in the hopes when the growth comes to them, they’ll make a significant profit.
Parcels of land desirable for “Land Banking” are those that lie directly in the growth path of rapidly developing cities. The initial goal is to buy undeveloped land that will increase in value because it lies in the path of urban growth. The key is to identify these parcels well in advance of the developers and wait for their values to mature. With diligent research, financing and managing of a land banked property, one can realize a handsome profit upon the sale.
Historically, countless fortunes have been made in land banking by individuals who understood the concept of buying and holding pre-developed land in the path of growth. They did nothing more than buy and hold land in Southern California's booming regions, in areas such as Los Angeles, San Diego, Orange, and Riverside counties. Donald Trump, Howard Hughes and Bob Hope are all famous land bankers, buying up large swaths of land in what are now highly lucrative areas such as Manhattan, NY, Las Vegas and Southern California.Herer are some examples: Disneyland 1954 
The before and after of the Balboa Airport near Costa Mesa (southeast of Los- Angeles) 
The aerial view of the old Balboa Airport in 2004 
Las Vegas in 1931  Las Vegas Strip 2007 
Buying Up Real Estate
Why buy real estate?
There are many reasons but the most important is security. Unlike stocks, real estate can never lose all of its value. As seen in the most recent stock market meltdown, stocks and companies can become non-existent or worthless over night. With real estate even if the building burns down or is struck by natural disaster the land that the building sits on still has value.
Another reason to by real estate with your IRA is income. There are many properties that can be purchased and rented for residual rental income. For example, say you buy an 8 unit apartment building for $100,000. After your down payment you have a loan for $50,000 with a mortgage of fill in the numbers here. With each unit renting for $600 per month you have a total income of $4800. If you subtract out your mortgage payment you are positive $ per month.
One more reason to by real estate is appreciation. Appreciation is the increase in the properties value from the time of purchase. Obviously over the past6 years there has been a huge surge in appreciation, over 25% in some areas, but as seen with the recent burst of the real estate bubble appreciation at these levels can not be sustained long term, nor should you expect them two. While appreciation levels in the 15%-25% range may not be expected over the long haul, they should be accounted for within your calculations of a particular property. When purchasing your real estate appreciation is something to always keep in mind but do so cautiously and with realistic expectations.
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