This older gentleman around my area, owns 36 billboards. He is currently looking to slowly exit into retirement, selling 12 per year until he is out.
These are located in tiny towns, so the rents are not high in the least, most are $200/month.
Basically he wants a 3 year multiple on the boards, so each one would cost ~$7200
I’m 27, so im looking at this like,for $7200 i could have $200 passive coming into my pocket for the rest of my life. If the towns grow in the next decade or two, maybe i could fetch 5X the rent it gets now.
I talked with my dad about it, and he seems to think it would be a nightmare to own one. Keeping up on maintenance, permits, etc.
i looked into all the permits, just a sign permit once a year, usually the person who’s property its on handles the yard work for a fee.
Only thing i really can’t account for is maintenance, but i never really see crews repairing signs, so that tells me maybe maintenance is very low.
You already thought of permits and leasing the space. What about electricity to run the lights at night (or add them if they don’t have them). The current owner should be able to give you a good idea about that. I think you’d also want to sit down with him and understand how much work and money is involved. For example, I assume the owner of the sign plays some part in designing and hanging the ones. Is $200/mo the top line, from which all these expenses are deducted out of or is $200/mo the bottom line, the amount you’ll take home each month (for each sign).
You’d probably also want the current owner to sign something stating that, so far as he knows, there’s no reason for any of them to come down in the next X years. A new contract with the landowner may be in order as well.
In other words, make sure the landowner isn’t going to rip it out next month or the city isn’t going to make you remove it soon do to an ordinance change.
It seems like a good idea, but my thought is that a nice, relaxed meeting with the current person is in order. You should get a good look at his books, if he has any. You need to see all his income and expenses and see what his actual bottom line is.
The more billboards you have the better. A few people can maintain and update a lot of billboards. You can offer clients a better deal on ads over a wider area. Etc.
I figured $200 would be take home on average. Some signs rent for a little more, some a little less.
I got a rough idea of what the actual land owner is given, so i deducted that.
What i like about these small town signs is that they have almost guaranteed occupancy. One of them has had the town car dealership as a tenant for the past 20 years.
I know i won’t become Ted Turner with these, but a little extra income never hurts.
The place I used to rent for my business had a billboard on the property. It was managed by a area-wide company. The owner of the property (my landlord) told me that he didn’t feel it was worth the money to keep it going. I was there two years and it is still there now, so the owner must have decided it was worth it (or, at least, not worth what it would cost to stop it). The company that managed the signs came by about once a month to change the signs, take care of the lights, etc…
This doesn’t help much, except that it seems to me that money is made by the people who manage the signs, not the ones who own them. If you had enough to make it worth while, I guess t would not be a bad deal, but attitudes towards billboards are changing and many are that they are an eyesore, so I think I would pass. If I had extra money to put somewhere, I think I’d probably consider a stock fund or some other instrument. My take on billboards is that they are on the way out.
It’s common practice for someone considering buying a business from someone else to review the books. Ask to see his for the past 5 years to get a better idea of what you’ll be getting into.
That’s why I mentioned talking to the city/county/state and specifically ask them about that, as well as talking to the landowners to make sure they’re isn’t any reason they’ll come down in the foreseeable future, so far as they know. That is, they didn’t get a letter from anyone telling them they’d have to come down and/or, for example, a neighbor isn’t suing them over it.
This is similar to buying a house and having the current owners stating that they don’t know of any thing that’s going to be done, in the near future, such as replacing sidewalks or sewer laterals, that the [new] homeowner is going to be billed for.
In fact, if the OP is planning to take out a loan for this, the bank may request these letters.
Not just the books, but ‘both sets of books’. When it comes to some small business like this, it’s not all that uncommon for the books to have a bottom line of, say, $200/mo (per board), but the owner might tell you that he skims $100 off the top. I’m not saying you have to do that, it’s trivial to put the money on the books, but it’s that much more profit. Asking about any cash the owner pockets is common once the talks get serious.
Also, OP, you mentioned hoping the city grows and you can bring in more money per board. If the city grows, it’s very possible whatever regional billboard business is in the area will make you an offer on your boards. That’s something to keep in mind as well. If it’s a reasonable amount, at least to start negotiations, take a good look at it. It may be worth your while to take the cash and run before they put up more boards, in better locations, for less money to the advertiser and drive you out of business.
A friend of mine owns a couple of two sided billboards. Both are near smaller towns. He says he has no problem renting the side going into town, but the side you see going out of town is hit and miss. He charges enough so that one side pays the taxes, permits, electric, etc and the other side is profit. He said his profit isn’t much, but it’s not costing him anything to keep them.