My elderly parents own two parcels of land in our home state, each purchased for 500,000 naira exactly eight years ago, and they need guidance on what to do with them. Here are their alternatives.
– Sell both for 20 million naira to pay off a 4 million naira loan and utilize the remaining 16 million naira to buy fresh plots of land or put the money in an MMF.
– Sell only one plot for 8 million naira (buyer wants to pay lower if only 1plot is available for sale) to pay off a 4 million naira loan, then utilize the remaining 4 million naira to buy fresh plots of land while keeping the other plot.
My excellent investors, We would appreciate your opinion.
Thank you.
Short answer: land banking can be a good investment, but only when the land is in a growing location, with clear title, and a defined exit plan. Otherwise, it becomes “dead capital.” Let’s analyze your parents’ situation like an investor—not emotionally. 1. First Reality Check (Very Important) TheyRead more
Short answer: land banking can be a good investment, but only when the land is in a growing location, with clear title, and a defined exit plan. Otherwise, it becomes “dead capital.”
See lessLet’s analyze your parents’ situation like an investor—not emotionally.
1. First Reality Check (Very Important)
They bought:
2 plots × ₦500k = ₦1M total (8 years ago)
Now:
Offer ≈ ₦20M total
👉 That’s a 20x return (~2,000%)
That is exceptional performance. So the question is no longer:
“Is land good?”
It is now:
“Should we lock in profit or keep speculating?”
2. The Critical Risk You Must Address First
They have a ₦4M loan
This changes everything.
👉 Debt = guaranteed negative return
👉 Land = uncertain future return
So:
Paying off the loan is non-negotiable priority
3. Evaluate the Two Options
OPTION A:
Sell both → ₦20M
Pay loan: ₦4M
Balance: ₦16M
Pros:
✅ Debt cleared completely
✅ Large liquidity (₦16M)
✅ Flexibility (can diversify)
✅ Risk reduced
Cons:
❌ Lose exposure to land appreciation
❌ May regret if area explodes in value
OPTION B:
Sell one → ₦8M
Pay loan: ₦4M
Balance: ₦4M
Still hold 1 plot
Pros:
✅ Keep exposure to land upside
✅ Still clear debt
✅ Partial liquidity
Cons:
❌ Buyer already negotiating lower price (weak position)
❌ Remaining land may be illiquid
❌ Only ₦4M left to reinvest (limited options)
4. What Most People Get Wrong About Land Banking
Land does NOT always keep appreciating fast.
Growth depends on:
Infrastructure development
Government policy
Population expansion
Commercial activity
👉 If the area stagnates, value can freeze for years
5. Smarter Investor Lens (What I’d Do)
Between the two:
👉 Option A is financially stronger
Why?
1. You already achieved massive gain
Holding longer = greed risk
2. You eliminate debt completely
Debt kills wealth faster than anything
3. ₦16M gives real investment power
You can split into:
Money Market Fund (stability)
Stocks / equity funds (growth)
Maybe ONE strategic land purchase (not two random ones)
6. Suggested Allocation Strategy (Balanced)
If they go with Option A:
Example:
₦6M → Money Market Fund (liquidity + safety)
₦5M → Stocks / equity fund
₦5M → Buy one high-quality land (not multiple cheap ones)
👉 This is diversification, not blind land banking
7. When Option B Makes Sense
Only choose Option B if:
The remaining land is in a prime developing area
You are confident of near-term growth (2–5 years)
Title is very clean (C of O / Governor’s Consent)
Otherwise: 👉 You’re just holding land emotionally
8. Key Question You Must Answer
Ask this honestly:
“If we had ₦20M cash today, would we still choose to buy this same land again?”
If the answer is NO → sell both.
9. Final Verdict
Land banking = good, but not always optimal
Your parents already won the investment
The smarter move now is capital preservation + diversification
👉 Recommended: Option A (Sell both, reset smarter)
If you want, I can:
Help you evaluate the exact location potential of the land
Or design a ₦16M investment plan tailored to Nigeria (step-by-step)