Scott Pape warns about central Victoria land banking paddock speculation

The financial advisor Scott Pape, known as the Barefoot Investor, has warned investors not to lured by spruikers into speculatively buying rural zoned land his central Victorian district.

The land banking process involves paying a $40,000 option on a portion of a larger rural parcel of land in anticipation of residential zoning.

In seven to 10 years' time the buyer has the option to buy or sell it, and supposedly make capital gains after rezoning success by the property spruiking investment firms.

"The mob behind this have reportedly been selling options on paddocks around my home town of Bendigo," Pape told his Herald Sun readers.

"I think it’s a giant, steaming, dog turd of a deal," he advised.

Last year the Urban Development Institute of Australia chief executive Tony De Domenico warned buyers to be careful about paying for options or reservation fees on land that ultimately may or may not be developed.