"Why Didn't I Buy There 10 Years Ago?"

The Power of Landbanking offers solid returns for clever investors

How many times have you said to yourself, "If only I had bought land there 10 or even 5 years ago?" If time travel were possible, who wouldn't go back and buy knowing what we know now about the dramatic increases in prices across Brisbane.

However, we don't have a time machine, we only have right now. And if you want to be the clever investor of tomorrow who did buy at the right time and who is now sitting on a veritable fortune - with all the ease, accomplishment and lifestyle freedom that comes with it - then I invite you to read every word on this page.

You can be one of those clever investors when you understand the principles of Landbanking. Landbanking may sounds like a new technique but it is a tried and proven strategy that has used by professional developers for many years.

How Does Landbanking Work?

Landbanking is simply the act of securing future development sites today. It could be a farm with future broad hectare subdivision potential, or it could be an old house on land with unit and townhouse development potential. Or even an old warehouse that could be redeveloped into a residential complex. It can even be vacant land.

One key to successful landbanking is ensuring your holding costs are kept to a minimum. That means deriving some form of income from the site to offset your holding costs. Whilst there are many options, most often, the income will be in the form of rent.

Once you've secured your site, you can add value. This is generally achieved by obtaining development approvals in the first instance, and going to the next step of actually developing the site (if you wish). And you can entertain the option of selling the project at either stage for a healthy profit.

Why this is a good strategy?

Using the Landbanking strategy, you have several major success drivers working for you. Each of these individual ingredients can be used quite successfully (independently of one another). Many people have made small fortunes doing exactly that. However, when you combine all three together, the recipe becomes extremely powerful.

This is because you are able to tap into:

1. Organic Capital Growth - providing you've bought well it's highly likely your property will enjoy an organic increase in value (organic capital growth),
2. Value Adding Potential - by obtaining development approvals you can substantially add to the organic capital growth (and introduce the additional option of selling the site with approvals in place for a premium sale price), and
3. Market Timing - if you've purchased during a soft phase of the market, you allow the market cycle to progress into a stronger phase offering a better market to sell in.

The Investment House 'Inner City Gold' Strategy

Our strategy is to buy small high potential development blocks in inner and middle ring suburbs of Brisbane. You have the option of sitting on them for a period before developing them. The "inner city gold" strategy also means you're NOT competing with the big players who generally look to buy larger sites for broad hectare subdivision, or sites offering high rise development potential.

The deliberate use of Market Cycles can also work in your favour. You can often secure sites in a "soft market" when distressed sellers are forced to meet the market and you have strong negotiating potential.

The key is securing quality development sites. Sometimes, the development may not be a particularly lucrative project today, but time will invariably work its magic, and tomorrow the project will be very profitable. The quality of the site cannot be overstressed.

Particularly well suited to Brisbane's Inner and Middle Ring Suburbs

Whilst this strategy has been seen to work well in most areas, it is particularly well suited to the Brisbane market. This is because of the substantial imbalance between supply and demand; coupled with the magnitude of market shifts.

Demand is "massive". The high net migration into Queensland is almost legendary. The Australian Bureau of Statistics reports more than 1,000 people per week (net) continue the shift to Queensland from overseas or interstate sources. And most of them move to South East Qld. And Brisbane represents the bullseye within South East Qld.

Future supply within Brisbane is "very limited". Many people are unaware there are significant demolition constraints within Brisbane's town planning regulations. This restricts the scope for increasing the density of most Brisbane inner and middle ring suburbs - you just can't knock down a row of houses and develop a townhouse complex. The town planning regulations don't allow it. That means huge constraints on the future supply of development opportunities.

That's a perfect recipe for successful land banking. If you find areas with high demand and significant constraints on supply - then you've tapped into the sweetest pickings.

Landbanking also offers cheap insurance. One of the major challenges developers face is finishing one successful project and having to "pay through the nose" for their next development site. And in a strong market, there's the added fear of "paying too much" at or near the top of the cycle.

The Landbanking strategy offers cheap insurance for shrewd developers.

What can go wrong?

Whilst this strategy promises healthy rewards, there are a host of traps for the unwary. In fact it's very easy to wind up with a lemon. If you buy a promising site and subsequently can't get the anticipated approvals, then it will very likely end in tears. And you'll have invested a small fortune to discover it's a lemon.

The list of potential problems is almost unlimited. And every site is different to the next one, so you can't use a simple "template" to assess them all. Problem sites are everywhere. Even in the ranks of professional developers it's hard to find someone who's not stubbed their toe at least once. And in this game, stubbed toes bleed a lot!

Mostly, problems come from inadequate due diligence.

It's a classic example of human nature. A novice developer will undertake a few successful projects, and then they'll get just a little cocky. That's when they start to take little shortcuts. Little omissions creep in. With a couple of wins under one's belt, it's easy to downplay the importance of engaging professional consultants. And the next thing - they've stubbed their toe with a lemon.

It's an expensive lesson.

The key is to have good systems coupled with competent advice. And, you must adhere diligently to those good systems, and heed the advice. That way, the likelihood of you purchasing a good site with limited risk is much higher.

Educate Yourself about This Real Opportunity

This is a real opportunity to make solid returns in a relatively safe investment. To begin the process of educating yourself (so you can be one of the 'clever' investors who did 'get in early'), I recommend that you subscribe to our free report series.

To find out more about how Landbanking strategies could apply to your situation, contact us now for a no-obligation chat.