It is frustrating. The two best options right now are 1) small, local banks and 2) SDIRA friends and family. Here’s how they work.
Small, local banks are where most people start out. My bank did just one billboard originally, and worked up to acquisitions of whole portfolios of billboards later. The big thing to remember is that you must EDUCATE the bank on why billboards are a good, safe loan. Where most people mess up is expecting the bank to even know what a billboard is. Your loan request should include about 50% of its bulk in why billboards are an attractive investment. Banks want to hear what the worst case scenario is, and if you can survive the worst case, then the bank feels reassured. Remember that banks are only concerned about getting their money back – they don’t share in the profit from the sign. They are pessimists by nature. So help them to understand that billboards are not a crap shoot, but a stable industry that’s been around for over 100 years.
SDIRAs are a derivative of traditional IRAs, which allow people with IRAs to make investments outside of the normal stocks and bonds. The reason I think this is a win/win concept for lending is that most people with IRAs right now are extremely unhappy with CDs with under 1% yields, and want ways to make more. And it is very patient money – people can’t use it until they retire. It only costs about $500 for someone to convert their IRA to SDIRA. Read up on this concept from EquityTrust, Entrust or Pensco (the three biggest SDIRA providers). You probably have at least 20 friends and family members with IRAs who might be players for this.
If you do borrow from friends and family, do it in small amounts from several people, and not all from one source. It’s a whole lot easier to borrow $5,000 from four people than $20,000 from one person. The smaller amounts make them more comfortable, and that makes you more comfortable, too.