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8-Point Blueprint to Succeed in Land Banking

Dec 15, 2023

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8-Point Blueprint to Succeed in Land Banking

Land banking is very strategic. Imagine walking into a branch of Zenith Bank with ₦100,000 to save it for interest. First, ask yourself several questions: “At how much interest and for how long would I have to leave the money sitting in the bank to gain a reasonable value?” Landing banking has much better odds, if you ask Steven Akintayo. At 37, the Finance Coach knows the value-tripling capabilities of land banking.

Land banking is a very lucrative and smart approach to investment. It only takes foresight to find the “right” land to buy for less. The definition of “right” is straightforward: “an undeveloped land with massive potential for appreciation.” This guide will help you succeed in land banking.

Akintayo, in the YouTube video above, gave the case study of Late Justice Joseph Adefarasin, a former Chief Judge of Lagos State High Court from 1974 to 1985, who paid £2,000 for a government-allocated property in the early 1970s. The land was located on Akin Adesola Road, Lagos State, Nigeria.

The building and civil engineering construction firm G Cappa then asked to develop the property for their construction business and, at the end of the rent term, hand back the developed property to Adefarasin. The rent from the property subsequently funded the education of all his children at the best schools in the world.

Adefarasin's youngest child, Pastor Paul, who is the founder of House on the Rock Ministries, claims that by selling the land after their father died in 1989, the family got millions of US dollars on the sale. His equity in the sale was "nearly a million US dollars."

"DO NOT START LAND BANKING WITH OTHER PEOPLE'S FUNDS; USE YOUR PRIVATE CAPITAL."

8-Point Blueprint to Succeed in Land Banking

1. It is not a get-rich-quick scheme.

Land banking is the direct opposite of MMM or any other scheme that promises you a 1000% yield in one week. It does not require you to bring one more person to buy land before you get your yield. It takes someone with a forward-thinking mindset to succeed in land banking.

How can you do that? It starts with a tactic to identify locations with massive growth potential. This is where you look out for signs of government developments. Are more caterpillars coming in and out of the area at large? Have you seen more than one “Julius Berger” sign around? This is a sign that the government may be planning on building a highway in that area. Highways lead to more investments, including from commercial investors. Are there any zoning changes? Has a neighbouring area been designated a free trade zone? That is another way to verify and take advantage at an early stage.

Also look out for an increase in commercial investments in major shopping malls, for example, Market Square, NEXT Cash N’ Carry, Shoprite and Spar. This could be a pointer that people may start to move in, and with people comes an increase in the value of your land.

2. Survey the Land and do your due diligence

The importance of getting the right documents on land cannot be overstated. Do due diligence before paying for the land. This means ensuring that the owner is able to prove ownership. You cannot give what you do not have - "Nemo dat quod non habet"

So, make sure you are getting the right documentation on the land. This includes:

"A Deed of Assignment," which simply shows that Salami is transferring ownership of four plots of land on the outskirts of the Sambisa Forest to Chukwudumeje.

"Survey Plan" is another document that Chukwudumeje has to get. This measures the exact size of the land and other points. Check out our comprehensive guide to avoid fake survey plans.

"A Certificate of Occupancy" is the third document that Chukwudumeje has to get. Each land can only have one Certificate of Occupancy, which must be renewed after 99 years. If Salami bought the land five years ago and wants to sell it, she can do a transfer of ownership to have the CofO transferred to the name of the potential new owner, Chukwudumeje.

However, to transfer such a document, you must get the Governor's Consent. This is because land belongs to the government, and the Governor must approve the transfer of ownership of land. You need a survey plan to get the Governor's Consent. With a survey plan, you can apply to the Surveyor General's office for the Red Copy, which is the original survey plan. This confirms that Salami actually has the right to sell the land to Chukwudumeje.

3. It is about timing.

You do not wake up on a Sunday and jump into buying land on Odili Road, Rivers State.

You should only buy land when it is ahead of its development curve. With Odili Road and other highbrow areas, you can see that the area is well at its peak.

It will cost at least ₦100,000,000 to buy land in those places. You probably won't get a good return on your land investment, except the government wants to build the African Tesla Depot, which could double or triple your profits.

Buy the land before it skyrockets in value. After doing this, the next wise step is to “hold” it (in cryptocurrency terms) until it appreciates over time. This is when patience is required.

4. Land banking rarely recognises inflation.

In 2010, you could get a whole lot from shopping with ₦100,000, but the same can't be said for 2023. The value of money changes over time depending things such as inflation and the exchange rate of naira to dollar. 

With land, it is not the case.

Land banking acts as a means to keep the cost of inflation in check. Though money may depreciate over time, land in a high-potential location will appreciate substantially.

5. It is a means of preserving your wealth.

In 2013, land in Ibeju-Lekki cost about ₦1,000,000, while in 2018, there was a 500% increase to about ₦6,000,000. Now, land in Ibeju-Lekki costs on average ₦15,000,000. 

The land does not require maintenance compared to one with buildings already constructed on it; all you need is a fence around the property. Events around the property can lead to an increase in the value of your land.

6. The right location matters.

The right location matters in land banking. Although this point has been addressed in Number 1, it deserves further emphasis. Make proper research on the location where you want to buy land. Find out what the government plans for that land. Does a master plan govern how a property should be structured? This is to avoid any government reclamation of your land. Is the land in the path of a drainage or oil pipeline? Ask questions.

A 2012 Amnesty International publication harped on how the Rivers State Government in Nigeria “made thousands homeless” by demolishing over 600 properties. The government rebutted the claims by insisting that the properties obstructed drainage systems. To avoid a back-and-forth trade of words and meanings, do proper due diligence before buying.

Ensure that the location you are purchasing has either shown evidence of government or commercial investments or is expected to have them.

Popular opinion should not be considered when buying land. The fact that the majority of people are buying at a particular location does not make it the next Lekki. Stand against popular opinion if need be.

Only consider factors that have a direct impact on potential.

7. Diversify your investments to mitigate risk.

Even if you have evidence of potential, do not over-invest in a particular location. Investing all your funds in a single location or type of land poses a risk to your investment goals and is strongly discouraged.

Look towards diversifying your portfolio. Invest in multiple regions rather than one you may consider the “golden goose." It may turn out to be chicken.”

8. What are your exit strategies?

Consider how you will get your ROI at the end of the day. You may decide to sell the land much later at a premium. It is important to know when to let go. You may also decide to partner with other sources that may develop the land for a higher yield.

 

 

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We try to make sure that the information here is accurate at the time of publishing. But the property market moves fast and some information may now be out of date. Zerodip accepts no responsibility or liability for any decisions you make based on the information provided. Graphics and images used here are for information purposes - we do not have ownership right over them.

8-Point Blueprint to Succeed in Land Banking

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