Any experience with Land banking?

Leveraging, renting vs owning, making an investment or buying a home?
zinfit
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Post by zinfit » 13 Jul 2009 13:42

I really question the economics of buying into this type of investment. Last year there was a lot of speculation on farmland. Wheat was selling on the USA wheat exchange for 22 dollars a bushel. Its selling for 4.80 today. I am not sure farming is a paying proposition right now. The promoters are the ones who will make any money. I wonder about the liquitity of these units. Remember all the exotic mortgage backed securities that contributed to the credit crisis. What's the difference? BRX said there was gold in those hills. They were right it was fool's gold.

cpulord1
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Re: Any experience with Land banking?

Post by cpulord1 » 02 Feb 2016 03:06

I'm kind of curious if any of you guys actually had your land sold and got money in return
It's been another 6-7 years....wondering how it all played out

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gossg
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Re: Any experience with Land banking?

Post by gossg » 02 Feb 2016 18:11

I wasn't really buying the farmland as a food investment. I was buying development lots.

The limited partnership was criminally mismanaged, and the promoter if permanently banned from setting up similar deals. I had figured that if the development failed, we could always sell it back to the farmers for about half of what I paid.

But despite setting up separate corporations (to make RRSP investments possible), she blended the bank accounts for all 22 projects, and used my investment to bail out earlier failing projects. The interim funding mortgage at hugely expensive rate was never paid out, and eventually foreclosed. I sent another $250 to the lawyers setting up a lawsuit, but that faded, too. I lost all of mine.

A friend's father bought into a land bank project for her in about 1991, and they paid out in 2011. I forget the compounded rate that resulted, but it was pretty good. So not all the projects fail. Again, it was a farmland bank with the intent to sell to a developer when the city expanded out that far.

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Arby
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Re: Any experience with Land banking?

Post by Arby » 02 Feb 2016 19:39

Perusing this old thread surfaced some names of long gone posters such as gossg, worthy, and nemo2. Nemo is apparently alive and well and posting on other forums. I fear that worthy may not be so lucky, as he said he had been diagnosed with cancer. Out of curiosity, gossg where have you been for the past 6 years?

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kcowan
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Re: Any experience with Land banking?

Post by kcowan » 03 Feb 2016 07:22

Arby wrote:Out of curiosity, gossg where have you been for the past 6 years?
and why have you stopped participating regularly in FWF? Such feedback would be useful to our marketing efforts.
For the fun of it...Keith

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Re:

Post by ultrafinish » 11 Feb 2018 03:28

kombat wrote:
10 Jul 2009 21:29
My wife and I participated in a Land Banking venture with Syndication and Development (S&D International) in 2006. We purchased 4 units, for a total cost of about $77,000.

We're still waiting for the land to complete its cycle and realize our profit, but out of curiousity, I did some digging and came up with some disturbing numbers.

The plot of land we invested in is in Leduc, Alberta. S&D bought the land from a farmer a year earlier, for about $2.2 million. They then chopped it up into about 440 units, and sold them to developers like us for about $19,000 each.

Do the math. S&D paid $5,000 for each "unit", then turned around and sold each "unit" to us investors for $19,000, less than a year later. So they made a fantastic return on their money. Time will tell if us investors will make a profit anywhere in the same league. At this point, I'd be content to just break even.
Kombat - any news on your land? We made a purchase of 1/4 acre of land from SD and tried to contact the company, but the phone is off. Just wondering what your experience with them so far?

cpulord1
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Re: Re:

Post by cpulord1 » 11 Feb 2018 17:28

ultrafinish wrote:
11 Feb 2018 03:28
kombat wrote:
10 Jul 2009 21:29
My wife and I participated in a Land Banking venture with Syndication and Development (S&D International) in 2006. We purchased 4 units, for a total cost of about $77,000.

We're still waiting for the land to complete its cycle and realize our profit, but out of curiousity, I did some digging and came up with some disturbing numbers.

The plot of land we invested in is in Leduc, Alberta. S&D bought the land from a farmer a year earlier, for about $2.2 million. They then chopped it up into about 440 units, and sold them to developers like us for about $19,000 each.

Do the math. S&D paid $5,000 for each "unit", then turned around and sold each "unit" to us investors for $19,000, less than a year later. So they made a fantastic return on their money. Time will tell if us investors will make a profit anywhere in the same league. At this point, I'd be content to just break even.
Kombat - any news on your land? We made a purchase of 1/4 acre of land from SD and tried to contact the company, but the phone is off. Just wondering what your experience with them so far?
Did you buy along time ago?
From what I hear, they went bankrupt or closed down their active business. They've pawned off the job of selling the land to a realty company.... I haven't had time to meet with the realtor who is in charge of this.

I feel there would be merit to suing them, because I assume that S&D still owns their share of land, they've basically spun off a holding company with assets but no active business... I feel like this was a huge scam cause their selling point was that we were paying a premium price for the land upfront which would pay for all the legwork to work on developing and increasing the value of the land until sold.... Including the engineering and development to eventually build if it came to that year's down the road. It's years down the road and they've taken their premium/profit and have left us with just waiting for a buyer of the same raw land they bought

cpulord1
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Re: Any experience with Land banking?

Post by cpulord1 » 12 Feb 2018 02:04

Here's the link discussing this in another thread

viewtopic.php?f=29&t=105756&start=250

Just a Guy
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Re: Any experience with Land banking?

Post by Just a Guy » 12 Feb 2018 09:23

Good luck with a lawsuit. It'll be throwing good money after bad. The land was never worth what you paid for it and, from the sounds of it, even if developed will never be worth what you paid for it.

The company, considering this looks like a scam from the beginning, has most likely been set up to ensure there is no way you'd ever get to the money, if any is even left to go after.

As for the actual land, the way it's been subdivided, it'll probably be a nightmare to try and sell and only worth pennies on the dollar if you could accomplish it.

The good news, if you can call it that, is you can write off the capital loss against any gains you may aquire in the future.

BTW, I highly suggest everyone read that other thread from the beginning. It's an excellent example for everyone.

Dudsy
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Re: Any experience with Land banking?

Post by Dudsy » 18 Feb 2018 17:54

My experience with land banking:

1) Investment:
I bought a mortgage through Walton back in 2004 on one of their projects in north Calgary called Fairweather Heights. The property is located just west of Sarcee Trail and south of 144th Ave NW and has never been resold or developed. There is a housing development immediately east called Nolan Heights. The land investor (from Indonesia) paid $22,500 for a 1/3rd acre undivided interest in the overall parcel. The investor put $7,500 down (33%) and borrowed the rest ($15,000) from me at an 11.75% interest rate.

2) Results:
Over 14 years I've been re-paid over $25,000 and the principal balance outstanding is approx. $11,500. If the investor ever defaults, the terms dictate that I take their ownership of the land. I don't know what this land is worth right now which is part of the problem with these type of investments. Assessment values don't seem to help as similar size parcels in the area are assessed at either $500k or $20 million???

3) Conclusion:
Back in 2004 I was very busy in my career and this was small portion of my portfolio... no excuse, but I didn't do what I would now consider proper due diligence on land valuation and risk. Although I inherently understood that the high interest rate was compensation for high risk, this could have gone sideways early on and I would have been stuck with the land ownership with no payments and an uncertain exit date. In retrospect, I'm glad I was the mortgagee and not the land investor. However, despite this working out ok, given the same opportunity now, I wouldn't take it.

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