Building new billboard off the freeway

[Jeff Stein]

I have the opportunity to get land just off of a busy interstate on a new commercial building I am working through purchasing. I think it would be a great location to have a freeway billboard put up to increase our income. Does anyone have experience with this sort of investment? The biggest potential issues are getting approval from the city, state and department of transportation. The cost of installation varies between $150,000-$200,000 and the rents would seem to be thousands per month.

[Cason Acor]

I haven't personally owned properties with billboards, but I have brokered the sale of several. My advice from that experience is to 1) make sure you understand the market rents very well 2) include annual rental increases 3) DO NOT agree to give the advertising company a right of first refusal, and 4) sign an actual lease, DO NOT grant an easement for the billboard. I've seen so many situations where a billboard company took an unsuspecting owner to the cleaners and signed a perpetual freeway billboard lease for less than $1000 per year with no increases. I've also seen deals almost fall apart because an advertising company decided to play hard ball with deliberately ambiguous language in a right of first refusal. If you can avoid those mistakes, you should be good to go.