Wednesday, May 20, 2009

Small investments can go a long way in Land Banking

Do you have twenty thousand?

We have heard from a number of potential real estate investors who have limited savings but not enough to buy a home in high priced states like California. In some cities like Dayton, Ohio, or Oklahoma City you can buy a home for sixty to one hundred thousand and rent it for five hundred a month. After insurance, rental fees, maintenance, travel, and taxes your return on rent will be virtually the same as a low risk CD. We think land banking may be a better risk reward opportunity for small capital investors.

San Fernando Valley California in Los Angeles County is a prime example of a past land banking opportunity. In 1950 the population was 250 thousand and today the Valley's population is 2.7 million according to the US Census. A $40,000 well placed investment there in 1968 would have increased 1000% by 1980 to $400,000. This is a huge return, and granted forty thousand was a larger investment in 1968. But this scenario shows population growth and a well placed investment can provide positive returns.

Antelope Valley in Northern Los Angeles County may provide a similar opportunity. Antelope Valley comprises of two main cities, Lancaster and Palmdale. They have a combined population of approximately 350 thousand today, and an abundance of vacant land. Antelope Valley has approximately 49% of the available pre-developed land in LA County. California's population is expected to grow to 60 million by 2050 and Southern California is expected to have the highest growth rates according to recent reports. This adds up to a great opportunity, which rivals San Fernando Valley results. The area has the potential for population growth, low capital entry point, and availability.

Land is still inexpensive in Antelope Valley and there are a number of ways to locate a well placed investment. We think offers some of the best low priced well placed investments that have the potential to produce lucrative returns. They also have land available for an investment of less than twenty thousand.