Investing In Billboards
Billboards are income properties without
the usual landlording concerns. Perhaps the biggest problem with
investing in billboards is that there are limited opportunities
to do so in most areas.
I like the idea of a billboard investment.
No toilets to fix, no tenants to evict. Just lease the space,
let the renter do all the painting, and collect the income. Of
course it might be necessary to upgrade the billboard or repair
it every ten years or so, but that just doesn't compare with
the regular problems that come up with other rental real estate.
The best way to make money with billboards
used to be buying property and then putting billboards on it.
However, this is getting more difficult all the time. Many communities
are limiting the number of billboards allowed, or just plain
outlawing all new ones.
One way around this that I have seen is
to have billboards that aren't billboards. The most common example
is old truck trailers that have been made into "mobile"
billboards. These presumably don't fit the definition of a billboard,
and so are left alone. It is just a truck trailer parked near
the highway that happens to have advertising on it.
I'm not sure if these are legally secure
enough to make advertisers fell comfortable. If not, the rates
would be much lower. I might try this if I had a property alongside
a highway or busy road, but I wouldn't invest in property based
on this scheme.
Buying Billboard Properties
The new laws and regulations almost never
make existing billboards illegal. They are grandfathered, meaning
they will be allowed as long as they are there. It may not be
okay to replace them, but they can generally be there as long
as they can be repaired. These are the properties that you will
want to look for to make money with billboards.
The math is relatively simple compared
to most real estate deals. On the expense side, you have your
financing, property taxes, insurance, and occasional repairs.
Advertising for advertisers is usually done on the vacant sign
itself, for the cost of the paint. If these expenses are less
than the monthly rent coming in, you have positive cash flow,
and it may be a good investment.
You'll want to know how long the lease
has to run. Billboards can remain empty for months, so you have
to account for that if you buy one with a lease about to expire.
Look around at how many empty billboards there are to get an
idea of how easy or difficult it will be to get it rented out
again.
Do some research on rental rates before
you start shopping for properties. Find out the range of rents
in the area, as well as information on vacancy rates, if you
can. Then, as you narrow your search, get the average rates for
other billboards on the same streets where your prospective properties
are for sale.
You want the rates on a property you buy
to be in line with others in the area. It's even better if they
are low. In that case you might pay a price based on the existing
rates and raise the rent when the lease is up.
Ideally you want a property that will have
decent cash flow from day one, and has a long term lease with
a client who has repeated renewed the lease. Then you might just
take that easy return on your investment for many years as the
rent also pays off your loan.
There is a strategy that I hesitate to
mention, because it seems unfair to me. But it can be profitable.
I heard about from an investor who bought a lot real estate with
billboards in Arizona. Once he had enough properties in city,
he lobbied for a ban on all future billboards,and joined any
groups that were doing the same. He urged the city council to
"beautify" the city by banning new billboards, knowing
that they would always "grandfather" existing properties,
including his.
Once the law passed, future competition
was eliminated. No new billboards could be erected, despite a
city that continued to gain population and businesses. The result,
of course, was predictable. Advertising rates on the existing
billboards skyrocketed over time. He said he was making a lot
of money on the ones he had.
Copyright Steve Gillman. This article was an excerpt from 69 Ways To Make
Money In Real Estate. Want to know the other 68 ways? Visit http://www.99reports.com/make-money-in-real-estate.html