Billboard Business, Billboard Investing

4 Tips For Dealing With Site Locators.

There are firms which obtain billboard permits and land leases and sell them for a fee.  Most are legitimate but there are unscrupulous developers who will try to take advantage of you especially if you are new to the business.  A billboard site seller has no skin in the game.  They have an incentive to inflate their fees, not to make you a success.  I can think of a case where a developer sold a mediocre two sided static billboard generating $1,500/month in revenue with an above market $850/month land lease to someone new to in the industry for $115,000.  If you assume power of $100/month, sales commission of 20% and  insurance of $45/month that board is generating a paltry $2,500/year in cashflow.  The cash return on capital is 2%/year.  That board is underwater and will never pay off as an investment.  Here are three pointers for dealing with site developers.

  1. Don’t pay a finders fee of more than $10,000-20,000 for a static billboard site or $40,000 for a digital billboard site.
  2. Make sure you’ve got a competitive lease.  The lease term should be at least 20 years.  The lease should cost no more than 20% of the projected revenue of the billboard. Also, make sure the lease is assignable to you without consent.
  3. Don’t pay more than construction cost plus $10,000 for a billboard which is up and empty or construction cost plus $40,000 for a digital sign.  Don’t pay the seller for work which you need to do generating revenue.
  4. Insist that a valid sign permit and a signed, recordable land lease be delivered to you at closing.

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