Land Banking to Maximize Wealth

Land Banking is the strategy of purchasing land and holding (or banking) it during the appreciation years and selling after an area begins development. With Land Banking, profits are not realized until the land is re-sold.  As a long-term real estate investment focused on growth, Land Banking is proven to generate high returns on investment with low volatility.

Diversify to Maximize Returns for Retirement

The IRA Land Group’s strategy is to help you diversify your IRA / 401 (K) assets with real estate.  Most IRA investments include a mix of stocks, bonds and mutual funds.  IRAs and 401(K)s were designed for long term appreciation and rolling them over into real estate for greater gains makes perfect sense as a tool for retirement. 

Higher Rate of Returns are Needed for Retirement

• Warren Buffet (CNN Money, May 5, 2008) expects stocks will not exceed a 7% rate of return.  At 7%, a $50,000 IRA invested in mutual funds returns $335,600 in 20 years.
• Even at a 10% rate of return, $50,000 will only grow to $558,800 in 20 years. This, too, is probably not enough for retirement.
• Investing in a higher growth asset averaging 16%, produces $1,368.000 in 20 years.

We believe Land Banking provides the greatest opportunity to achieve a rate of return higher than 10%.

Invest in Pre-developed Land To Maximize Profit

All developed land goes through three phases.  Undeveloped, pre-developed and developed. The pre-developed phase is where the most appreciation in land value occurs.   We apply our Land Banking Formula to determine when land goes into this phase.  By researching and acquiring land in the path of growth and buying early in the development cycle, we are able to offer our customers a highly appreciating real estate asset. 

Targeting the Path of Growth

Land desirable for Land Banking lies directly in the growth path of rapidly developing cities.  Population demographics or, more specifically, the population growth path, determines where to invest.  The key to Land Banking is to identify parcels of land in the growth path in advance of developers and wait for their values to mature.  

1. In 1950 the San Fernando valley had a population of 250,000. 
2. In 1960, the San Fernando Valley had 1,100,000 people.
3. Today, the San Fernando Valley’s population is over 2,700,000.

Population Growth Path Determines Return on Investment

In Los Angeles County, land can increase in value as a result of several factors:

• Population growth increased the demand for land
• Land is rezoned to a more valuable zoning (i.e. from agricultural to industrial).
• The zone density increases (i.e. from one house per acre to three or four houses per acre).
• Additional infrastructure development occurs such as paved roads or utiliies
• Businesses invest in major projects

Our Land Banking Formula

IRA Land Group has a team of experienced buyers that locate and acquire pre-developed real estate with maximum growth potential using our Land Banking formula.  This formula when carefully applied is the key to IRA Land Group’s ability to identify land in the direct growth path of a dense population center.

All of these growth indicators must be present before we invest:

• Master plan for community (streets, roads, sewer, electric, and gas)
• Existing commercial and residential development
• Authoritative population projections and studies
• Existing and planned industry and commerce
• Proximity to large metropolitan population
• Educational system: primary through college
• Adequate utilities for massive growth
• Accessibility by freeway, train, air
• Abundant, available water supply
• Level, usable land

With diligent research and intimate knowledge of land banking property, we help our customers realize a significant return upon the sale of their property.

Southern California: Where to Put 6 Million People?

No area of the country holds as much growth potential for Land Banking investors as southern California. According to the Urban Land Institute (ULI) of Los Angeles, "the Los Angeles five-county region will experience a demographic earthquake of a magnitude of 6 million more people during the next 20 to 30 years."

The Jobs / Housing Balance

There is currently a jobs/housing imbalance between North Los Angeles County and South Los Angeles Country. In 1997, North Los Angeles County had a jobs/housing ratio of .98 while the city of Los Angeles had a ratio of 1.41. This imbalance is projected to dramatically worsen by 2025 with the influx of 6 more million in population.  (Source: Southern California Association of Governments)

This imbalance, which cannot be sustained or accommodate future growth, is driving major development projects within LA County.  A majority of the influx of 6 million people will reside in the cities of Antelope Valley including Palmdale, Lancaster, Victorville and Apple Valley as the numbers of jobs increase within North Los Angeles County and the population chooses not to commute into Los Angeles and live where housing is less expensive.

These conditions are a powerful force in the Southern California market and make real estate within North Los Angeles County perfect for Land Banking.