Buying/Investing in Billboards?

Question

Has anyone ever invested in billboards and if so, how profitable of an investment can it potentially be? I've been interested in the idea for a while but do not know anyone who actively invests in them. What kind of cash do you need to purchase one? How do you find them? Any advice on getting into that kind of investment field?

Any feedback is greatly appreciated Thanks!!!

Pat G. · Answer

Matthew:

Over the years I have owned 2 billboards. Neither of them were digital but both on main road ways with great daily car counts.

In my experience most of the ones I have marketed to are not on an easement (separated from the main property it is on.) So what I did is drive around and got the address of where the billboard was located and mailed the owner of that property.

As far as returns, that is really up to you as far as what type of return you want each year based on the cash flow that the billboard throws off.

In my experience the current owners don't push for the max they could get from a cell tower of billboard because it usually not their primary business, just a extra income source.

I would research your State Laws on billboards and see what you can and can't do first. I know here in Michigan they are not allowing any new permits for billboards, last I checked. And then if you do find an owners who wants to sell you their sign, you have to make sure that you can get an easement (separate parcel ID for the sign itself) from the other property it is one. Now, if the property has a mortgage on it, getting the mortgage company to break that part of the land off the mortgage can be a trick.

The cash needed to invest varies, based on the seller and what returns you want to obtain. I paid several hundred thousand dollars for both of mine. I don't remember the exact numbers, sorry.

Also look for billboards owned by companies like Lamar because they typically will pay a higher monthly payment.

To find them: Check out this site for a place to start building your list of signs. Check those for sale as well as lease. http://www.outdoorbillboard.com/  and drive around your area, mostly by freeways and obtain addresses. Then go to that city/town's online property tax lookup and find the owner from there. Now, most of the properties may be in a name of a LLC or Corp. so from there go to your state's corp lookup to get the owner of the corporation.

Hope that was not overload. Let me know if I need to cover anything more.

Hope that helps,

Pat Gage

Joel Owens · Answer

If the current owner has a crap deal then the seller will need to pay you to get out of it and purchase. If they are not motivated and want you to pay a premium for a bad lease and undervalued income stream then move on to the next one.

John Thedford · Answer

I never pursued the idea but a client of mine made TONS of money with them. He bought parcels and put up digital billboards. I believe his costs were in the 300K+ range per location. These were central FL locations.

Joel Owens · Answer

I know a few retail center owners that have put billboards on their properties.

The companies offer up 15% of audited annual revenue. It makes about an additional 18k to 22k per year for the land owner.

Newest is LED signs. Someone doesn't pay you just delete them from your office or house computer and leave the rest on there! lol

Used to have the one panel kind and then it moved to the rotating flip signs and now LED.

Francis A. · Answer

@Joel Owens

Thanks pal!

Francis A. · Answer

@Joel Owens

@Pat Gage

I am entering this conversation on the late side. I was about to list a new topic but luckily, this thread was suggested by the clever Biggerpockets software.

If I may ask for both of your opinions...

Firstly, regarding LED boards on a private property, does the owner of said private property assume the cost of installing the LED and if so, are you familiar at all with such costs?

The reason I ask is because, I am looking at a property in Los Angeles that has a billboard on site. It faces a fairly trafficked main road. To my untrained eye, the sign is at least 40 feet high and has a full sized billboard. Apparently, there is an existing contract in place that expires in 4 or 5 years.

In cases like these, is the new owner of the property necessarily locked into the 5 year contract? If so, whomever negotiated the deal to use the billboard for 5 years really got an amazing deal.

However, if the price of the billboard per month reflects "15% of audited annual revenue" then the existing price that's locked in for 5 years might make sense.

Now, if a new owner goes in and is able to upgrade the revenue this property brings in, then the new Billboard rental price should reflect the 15% of the adjusted revenue statement.

I am in the right ballpark or skating on thin ice?

Thank you!

Pat G. · Answer

Matt:

No problem on the time getting back. Yes, you can reach out and get in touch with me if you have any questions, I would like to network with others.

Look forward to hearing from you.

Pat Gage

P.S. Use the email and cell on my profile page for the best results.

Matthew Rembish · Answer

@Pat Gage

Pat,

That was incredibly helpful, I really appreciate the feedback and I'm sorry it took so long to get back to you. That sounds like a great process, I'm going to start looking into it. If I have any more questions, I hope you don't mind if I reach out to you again. You seem like you are very well versed with this kind of stuff.

Matthew Rembish · Answer

@Robert T.

I kind of figured that might be the way things were. That makes a lot more sense now that I think about it but I had to ask around just to be sure. I figured it could have been a neat market to break into.

Matthew Rembish · Answer

@Joel Owens

Oh ok, that's interesting. I was thinking of more investor-owned billboards rather than commercially-owned billboards but I like those numbers. The LED version is a nice idea too.

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