Sub-leasing


#1

I am thinking about buying 4 10’6" x 36’ wood billboards with Interstate frontage. I live a good distance from the locations and have thought about sub-leasing the billboards to a national company. I am new to the industry and would like to know if this is a good idea and how do these companies usually handle the lease, do they pay a set monthly rate or do they usually pay a percentage of the revenue.

Thanks,

Scott


#2

You should put them under contract with a reasonable due diligence period, maybe 60 days, and approach the billboard companies about a sub-lease during that period. I have done about 30 14’ x 48’ subleases, and the hardest part is getting them interested in doing it. It has to go through a lot of channels for approval. You may also find the rate to be too low – it all depends on how bad they want or need them. If the sub-lease concept does not fly, you can always cancel the deal before it goes firm. Or you may elect to go forward and operate them yourself. But I would not buy something under the hopes that you can get a sub-lease deal struck, without having it pre-approved by the lessee.


#3

Thanks for the information. Your advice is invaluable and I will definitely use at least a 60 day due diligence period.

Thanks again,

Scott