Income and Expense from Outdoor Billboard


#1

Hi, I am trying to research and get into outdoor billboard industry now.

I talked with 6 billboard sellers nationwide.

I see that some of the billboard in Atlanta cost about $120,000 makes around $3,500 per month / $160,000 makes around $5,000 per month and 25% of the income goes to ground owner instead of ground lease fee or permit fee for year.

I also saw the other one in California near Venice cost about $55,000 and makes around $2,500 in slow season and $7,000 in peak season. Ground lease fee is $2,200 per annually and around $200 for permit of the billboard from the state?

I know that billboard income , cost and expense can be totally different from place to place…

However, what I really want to know is that if I am willing to invest $120,000 or $160,000 or $200,000,

what is expectation of net income from that if I do the right job to get the right billboard?

What is minimum net income of those 3 and what is the maximum net income of those 3?

I really want to get an idea of this.


#2

Generally, you do not want to buy/build billboards at less than a 20% cap rate. The numbers you quoted were ambiguous on the real returns, as when you say “makes” I don’t know if you mean the revenue or the net income. But regardless, factor in a 20% cap rate to get the real value. And that is 20% of actual income for the current year (and last several is even better) not a hypothetical revenue that is not in hand.


#3

Hi Frank,

Thanks for replying.
I was saying ‘makes’ by gross income because I wrote that there is $2,200 ground lease per year.

So how much net income do I expect from, let say $120,000 cost billboard usually?
Just give me a clue so I can get the idea, it could be range which I can expect where to where.

If you are investment your money of $120,000, how much income is usually good that you can say it was a good deal?

Thank you,
-j


#4

To be worth $120,000 it would need to net at least $25,000 per year. But let’s clarify what I mean by net. I’m talking about having a track record of netting, including the past 12 months, $25,000 including conservative assumptions of vacancy and rent levels – and I’m also talking about including soft costs such as the cost to actually rent the ad space and other administrative costs, insurance, etc.

A lot of sellers are going to talk about netting $25,000, but it does not include all the real costs and vacancy, etc. and they are actually netting maybe $10,000 – so be very careful. Due diligence is key.


#5

Thanks for the good note.

Yeah they only talked about ground lease and state permit but not the insurance.
I heard that painting the ad or printing the and (including installation) will be paid by advertiser company?

So, real net of worth $120,000 outdoor billboard could be around $10,000-25,000 at least. I did expect more than that.


#6

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