My parents have some lang along I-65 in a growing area. They are now retired and thought about looking into billboard advertising to help suppliment their income. Do they need to have the sign constructed or is their companies that will do this with some sort of extended contract? Their funds are farily limited to get started. An direction or help to get started will be much appreciated.
Get some telephone poles from craigslist and go to HomeDepot or Lowes and start building.
If you feel the land is viable as a billboard location. you should call the billboard companies in that market and see if it is 1) legal and 2) something they would want to build. If you have limited funds, and even if you don’t, you probably want to go with a billboard company as opposed to building it yourself. It will cost you $20,000 to $80,000 to build it yourself, assuming a steel structure, and even then, you would have to obtain an operator’s license, insurance and other fixed costs that would probably be impractical for just one location.
Are the billboard construction costs eventually going to come down in your opinion or others?
In my opinion I don’t see the sustainability in such a high construction costs for billboards because ad revenue is down and I think it will be down for a long, long time so it won;t justify high costs of billboards. What’s the cost NOW to construct 12’x24’ I Beam billboard and Monopole billboard with lights?
What are your thoughts?
Great question. In my opinion, the cost of building your standard 14’ x 48’ monopole is way too high at $50,000+. But let’s put that in perspective. If you build a 14’ x 48’ monopole that rents for $700 per side, that’s $1,400 per month. A similar rent house that costs $50,000 rents for about $495 per month – and has a similar expense ratio. Of course, people who speculate in houses will say that the house will inflate in value since it’s real estate, but that’s not proving to be true right now. So if billboards are overpriced, then single family homes are insane (which they are).
At the same time, the bulk of a monopole’s cost is the steel. And steel prices have been declining, while the cost of billboards has not. This is probably because the industry had such wild profits over the last decade that fabricators could charge whatever they wanted and no billboard company would try to dispute them.
Recessions have a great ability to restore pricing to real levels. Are billboards too high? Yes, in my opinion. How low can structure prices go? I don’t know – but I know it’s less than what they are now.
In the interim, you can still build structures out of telephone poles (although you’ll sacrifice a lot of longevity and aesthestics) and you can build 12’ x 24’ I-beams for about $25,000 if you are a good shopper.
In many cases, on 14’ x 48’ monopole locations, you are better off selling your lease and permit to a larger company who is willing to pay the huge cost.
If you were able to rent for $700 per side it would only take you approx 4 to 5 years to pay off, once payed off you would be making good money. Especially if you had 5 or 6 billboards.
“But let’s put that in perspective. If you build a 14’ x 48’ monopole that rents for $700 per side, that’s $1,400 per month. A similar rent house that costs $50,000 rents for about $495 per month – and has a similar expense ratio.”
You’re not taking into account the expenses or the interest on the money. It’s more like 7 to 10 years, best case.
I just wanted to add that I have been checking TAXATION of billboards and some of it is a little scary (I live in heavy populated suburban area) Rents can vary greatly for big companies they’re paying (when spoken to few land owners) $900-$1400/mo for 14x48 billboard. Now, in some townships I’ve seen yearly taxes around $3500- $4000 for one billboard.
One recent check in other township for back-to-back 12x24 with lights was $2600 per year. Frank, that is a lot of money to get taxed on the billboard. (I’ve checked the records with the township) In those situation you can’t be paying much at all to land owner or it’s just waste of time for few hundred $$ considering vacancy, lower ad revenue, ground lease payments etc.
Personal property tax varies from state to state, in a range of 1% to 3% of appraised value. If a sign is appraised at $50,000, then the tax would range from $500 to $1,500 per year. That is not going to kill a sign’s economics. If you are seeing taxes of $3,000 to $4,000 per year, then that would suggest values of over $100,000, which would necessitate rents well above the figures you have thrown out. I would talk to the taxing authority and find out the truth, as this does not make much sense.
Getting spots seems like the hardest part! If you can find a spot that allows wooden billboards then you could put up a wooden and then you could easly pay for that out of your pocket. If the sign does good then maybe upgrade to a mono if not either set the billboard on fire late one night or rebuild it every 5 or 6 years.
The only bad thing is finding a spot for wooden is even harder than mono, for example McKinney allows billboards in certain spots but does not allow wooden.
McKinney, and most of the cities on the Highway 75 corridor north of Dallas, are not very easy to work with. In most towns in Texas, you can build wooden units.
You never want to build a wood unit with the idea of changing to a monopole down the road. The way the ordinances change, your legal location of today will be grandfathered in 5 years, and you can’t change it.