Just Starting Out

outdoor billboard investment forum
1

I’ve had a long interest in real estate, particuarily outdoor advertising. I launched my real estate company a year ago and have acquired 2 properties. I’d like to make a move in billboards.

A few questions I have:

  1. Where are the best online sources for identifying billboards that are being sold and already generating revenue?

  2. What maintenance is involved with a billboard?

  3. How do you identify advertisers for billboards?

  4. Is there a book you would suggest reading to learn more about the business?

  5. How do you research a billboard’s market in an area that you aren’t familiar with? What critera should be looked at? I’m from a rural part of New York State and I predict that most of the billboards I would buy, would be in different parts of the country or in a city.

2

The only on-line source for buying existing billboards is www.outdoorbillboard.com. They are very low maintenance, as you only change the advertisement every six or twelve months. Other than that, the only moving part on the billboard is the timeclock, and the only things that wear out are lightbulbs. You will want to make sure the lights are working on a periodic basis, and to make sure that there are no complications from any severe storm that hits near the sign.

There are 10 sources for billboard advertisers: call-ins, direct mail, move-over, quick close, combo, co-op, pre-emptible cash, pre-emptible trade, landowner trade-out, public service

There is only one book and course on the billboard industry, both of which I wrote after selling my billboard company, which was the largest privately-owned billboard company in Dallas. You can find it on www.outdoorbillboarduniversity.com.

Finding billboard locations is extremely complicated, and you have to learn the system to succeed – and that’s all covered in the book and course.

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3

I came across this website that also sells billboards. http://www.signvalue.com. Have you used it before?

Have you ever used a company to lease your billboard space for you, or have you always done it yourself?

4

I’ve not heard of that website, but anyplace that you can find a good deal on sounds fine to me – even eBay and Craigslist.

I have sub-leased signs before to major outdoor companies (such as Clear Channel and CBS). That is a win/win when your sign is worthy of national advertisers (who pay two times more than local advertisers). They pay you what you would get if you were to rent it yourself, but they do all the work.

5

To start, I’d prefer to buy a billboard with an advertiser or advertisers already leasing the space (to reduce risk and ease into things). Location is important to me. I’d rather spend more to buy a great location that is desirable. How many times earnings should I expect to pay for a billboard with great location and advertisers already in place? 5x earnings? 6x? or more?

I’m interested in buying your CD’s. Are they videos or audio?

I’ve been interested in billboards for a long time. I was looking at a deal to buy vacant land and was in conversation with Lamar about erecting billboards, but the money wasn’t there to justify it. I think doing it myself could be a lot more profitable.

6

You should buy billboards based on a rate of return. I only pay a 20% “cap rate”, which means that the rate of return on the billboard – based on paying cash for it – is 20% annnually. this allows you to pay off your debt, with interest, in about 7 years, and thereafter it is all profit. Don’t be fooled into paying a 10% cap rate, as you’ll never get the sign paid off before the lease expires.

The CDs are all audio, without video, I have a ton of photos of everything described in the CDs in the printed portion.

Lamar, and other billboard companies, traditionally pay 20% of the revenue as ground rent. If you cut out the middleman, you’ll make three times more.

7

Frank, thank you for all your responses. Much appreciated! This is something I’ve wanted to do for years, and I’m really passionate about it.

Looking at some potential deals, the rates of return look to be be outstanding for billboards. If you finance a billboard purchase, what is the typical length of the loan?

And have you had problems working with banks to let you borrow for a billboard? I found one company online that specifically finances billboards. It is called Stark Capital. Have you ever heard of them?

8

First of all, if you’re going to buy a billboard, make sure that you do great due diligence on it. There are four areas to focus on:

  1. the ground lease
  2. the permit
  3. the advertising leases
  4. the structure

I started out with a small. local bank. I did one billboard, and when they were comfortable, another, and then another. When I grew to their loan maximum, I moved on to a larger bank. Most people grow their billboard banking organically, like a tree.

9

Would love to help, if you need graphics work for client design etc.

10

My name is Matt Moates and I sale billboard supplies. Give me a call and I should be able to help you out. If not, I can certainly point you in the right direction.My # is 813-664-8945 or 813-900-7238-Cell

11

OK Guys. I’m also a newbie in the billboard industry. Just purchased my first rental property and been looking into billboards for a while. I have a couple of questions.

-Can a billboard be built on a residential property or only commercial?

-I want to purchase the land and built the board. what’s the cheapest alternative?

-what location should I be looking for?

Now- I will be buying Frank material soon, but just need the basics for now.
Thank you in advance for your time…

12

  1. Billboards are controlled by the Highway Beautification Act from the 1960s. It is a federally regulated industry. Billboards are not normally allowed in residential zoning, but only in commercial. However, there are many cases of houses being built on commercial zoning, so it is possible to have a billboard in what appears to be a residential area.

  2. You are much better off leasing land than buying it, and using the money you would have invested in the land to build more billboards. The cheapest type of billboard is the wooden telephone pole style. These cost around $3,000 to $5,000, based on size and height.

  3. Billboards are regulated on zoning and spacing between signs. You need to know the laws to know where a billboard can go. As far as markets, the most opportunity right now is in medium-sized and small towns that have untapped demand and available sign locations.

13

Thanks Frank for the response.
I was thinking of buying the land because I was worried of what would happen if the landlord sells or losses the land.
How can i find a company that will build the board.
So, only commercial land is allowed to build a board.What happens if you try to build on a residential land.

14

So I too am absolutely brand new and dripping wet behind the ears regarding Billboards.

I’m looking at a smaller market I found what my gut is telling me is a, Hole in one/Home run/Gold nugget the size of a basketball.

I found a 15’ wide X 40’ long strip of land at the corner of an intersection consisting of two, 2 lane non-divided roads. The high traffic count is 17,100, low is 10,600. I cant do a lease with the owner, I can only purchase.

I don’t want to approach the local BB company to ask about feasibility, rents, etc and risk tipping my hand to have the property stolen out from under me, but I want to get an Idea of if a Bil board can be put up there and what to expect for income so I can underwrite the deal correctly. I will be using family cash 2500.00 and want mitigate risk.

I should add there is a rite-aid on one corner, Walgreen’s on the other, McDonald’s on the third and I cant make out what is on the fourth. Also very close is, Hardees, KFC, Big lots, verizon store, wafflehouse and more, with google earth showing major earth moving project very close at the time the pic was taken. The a fore mentioned cooperate stores and development are all with in .10-.25 miles of the site.

As I write this I almost know that I should pull the trigger and do it BUT what am I not seeing?
and that’s a big but…

Assuming once I have title in hand I go straight to a leasing Company which would do all the permits/constriction etc. what other out of pocket expenses am I not seeing?

Thanks for your thoughts,
Chris from Delaware

-I did post this as its own thread but after a few days and no reply I thought I’d “bump” it by posting it under a thread with 12 replies. I’m itching to know if I should pull the trigger… please excuse my impatiens I’m just so excited!

15

So I was thinking no one replied because what I am talking about can not be seen. here are some pictures with measurements to the next intersection 105’ from the front corner & 280’ from the back corner. Thats a McDonald’s right next to it.
I hope someone reply’s soon… even to let me know there is someone out there reading this…
Thank you for your thoughts,

Chris from Delaware

16

Chris,

I just posted on your same question on another forum topic, but you should not buy the land until you have the billboard permit in hand. You may need a state billboard license to pull the permit, and you may also need a city permit. The regulations are extremely complicated – particularly at corners – so you need to make sure that you have a permit in hand before you make any capital investment in the land.

Start with talking to the city about whether you need a state permit or state license to pull a bilboard permit on that location. If so, call the state and get the process to get the state license and permit. Then pull the city permit (if required). But don’t buy anything until you have the complete permit in your hand and ready to go.

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