15-20% seems very high. Also Not knowing if all your add space will be rented, how can I come up with a monthly number?
I agree with Mike. What if you’re not able to rent your ad spaces for several months ? Can you write in an exception into your lease agreement for only paying rent when you have a customer ?
I still lean towards buying the land which your billboard is on. It is a pain finding an owner willing to parcel out his acreage, but it takes the worry of this big monthly rent expense out of the picture.
Just my take,
George
Frank has an ebook (that I highly recommend) for land owners on how to negotiate the lease. It will give you an idea of what the landowner is thinking. Personally, For my i401k, I have been looking at buying the land that already has billboards on it and then just getting the lease income from the board. I’ll let the owner of the board handle the selling of the space. Note - being in an i401k account, the laws state I can’t do any work on a structure on land the i401k owns. Same goes for billboards on land in my i401k. I can’t do the selling of ad space or work on the billboard. I can only collect the lease payments and pay the real estate taxes.
As a landowner, the minimum I would accept is 15% and would be looking to increase each year (or every other year) for the term of the lease. If the billboard is empty for a month, then I would expect a minimum amount. For example, if it’s a standard size one sided billboard, along a busy state route that normally rents for $1200 every 4 weeks, I would expect at least 15% ($180). If the board is empty, I would expect $75 and have that written in the lease.
As owner of the land I have the property taxes to pay and if the parcel is not producing any other income, then the billboard lease would be the method of earning the money to pay the taxes. Obviously I want to earn more than the taxes.