How can I finance this billboard property with commercial space?
Member since 2019 · 3 posts · 1 vote
So, I found the opportunity to buy or rent a small patch of land on PCH in Huntington Beach that includes a billboard.
After doing some research, there's no way that the ad revenue the billboard would bring in wouldn't cover the mortgage.
I want to buy the property but don't have the money for a down payment.
What are some ways that I can purchase the property?
Or would it be better to rent and bring in money from the billboard that way? Would I even be able to while renting?
Thanks in advance for any input!
The first thing I would have to point out is there is always a chance of losing money. So your statement that there's no way you can lose is false. But that's semantics. I get it. Seems like a hot opportunity with a high chance of success.
As for financing on a billboard only property, I believe you only have two options. Seller financing. (Best option.) Or a gambling private lender. Although lenders look at income, they're unlikely to give much value to billboard only income. As for seller financing, they would likely want a hefty down payment to compensate for the loss of monthly income. Unless you were going to pay them more than the billboard brings in, so all of the billboard income, plus paying them put of pocket.... I suppose I cannot predict whether a seller would entertain that... can you take home equity to get the down payment for seller financing?
As for renting... I have no idea how you would convince them to rent to you for less than the billboard income.. there's no upside for the seller... i.e. rent the property to you for 500 while you collect 1000 from the billboard... did you have some other idea of how that would work, which I am missing?
The first thing I would have to point out is there is always a chance of losing money. So your statement that there's no way you can lose is false. But that's semantics. I get it. Seems like a hot opportunity with a high chance of success.
As for financing on a billboard only property, I believe you only have two options. Seller financing. (Best option.) Or a gambling private lender. Although lenders look at income, they're unlikely to give much value to billboard only income. As for seller financing, they would likely want a hefty down payment to compensate for the loss of monthly income. Unless you were going to pay them more than the billboard brings in, so all of the billboard income, plus paying them put of pocket.... I suppose I cannot predict whether a seller would entertain that... can you take home equity to get the down payment for seller financing?
As for renting... I have no idea how you would convince them to rent to you for less than the billboard income.. there's no upside for the seller... i.e. rent the property to you for 500 while you collect 1000 from the billboard... did you have some other idea of how that would work, which I am missing?
The first thing I would have to point out is there is always a chance of losing money. So your statement that there's no way you can lose is false. But that's semantics. I get it. Seems like a hot opportunity with a high chance of success.
As for financing on a billboard only property, I believe you only have two options. Seller financing. (Best option.) Or a gambling private lender. Although lenders look at income, they're unlikely to give much value to billboard only income. As for seller financing, they would likely want a hefty down payment to compensate for the loss of monthly income. Unless you were going to pay them more than the billboard brings in, so all of the billboard income, plus paying them put of pocket.... I suppose I cannot predict whether a seller would entertain that... can you take home equity to get the down payment for seller financing?
As for renting... I have no idea how you would convince them to rent to you for less than the billboard income.. there's no upside for the seller... i.e. rent the property to you for 500 while you collect 1000 from the billboard... did you have some other idea of how that would work, which I am missing?
Hey Shane, thanks a lot for responding! You make some really good points. The renting idea was something I hadn't thought about much at all, so I'm glad you put things into perspective there. And you're totally right, I'm sure they'll want a hefty down payment to compensate. I'm teaming up with an investor on this that hopefully will be willing to help. I'm considering building a little coffee shop there that I think would be really successful so we'll see how that fits into the equation.
@Joseph Nevarez
If the building is valuable enough, it may support the loan. If the investor will give you the loan to secure owner financing and build you may be able to refinance... I've though about investing in straight billboard properties, but I think of then basically like high interest rate bonds. The only value is the return itself, so it's a great place to park unused funds for a decent return, but unlikely to secure any loans...
@Shane H. Thanks for your input! Good things to consider.
1. Put the property under contract.
2. Sell the billboard lease income to an investor through a perpetual easement (simultaneous closing SIMO).
3. Pay cash or take out a small loan for the difference to buy the land.
SignValue
It should be able to be underwritten as another revenue stream just like a lease in the commercial space. I've located 3 billboards on PCH in Huntington. 2 have vacant land on the lot and 1 has a small apartment building. I would recommend a smaller lender as the loan wouldn't be that large for a commercial lender.