I own a double sided billboard that the signage people get $4400 a month per side . My contract is over soon, what should I be getting to sign another ten year deal?..Any and all opinions appreciated, and thoughts about how to do the math on this…And if I don’t sign, I will be in the market for a replacement signs (14x48) so please feel free to contact me…
We have an inexpensive service ($199) on this site to review ground rents. Call the site at (800) 950-1364 and set it up. You probably cannot get a “replacement sign” if they take it down, so it’s essential that you do all your homework before talking to them. Most signs in the U.S. are legal, non-conforming – you are stuck with them – and even legal conforming locations can be “jumped” in most cases.
I was going to use that service after getting some approximate numbers, to use as a bargaining chip but if I can’t get a replacement sign…then they probably would offer me next to nothing as rent (so paying $199 would make it even worse?)…because the land is worthless without the signs…thanx for such a quick response though…
I don’t know what you mean by “jumped”…
The sign company does not want to lose the sign any more than you want to lose the income. What’s essential is to find out what’s fair, so you can have a win/win deal. Too many billboard leases are win/lose, where the landowner does not get the fair price for no other reason than not being aware of what the fair price is.
Jumping a lease means that the existing sign owner can apply to move the sign to a neighbor’s property, and since a new permit cannot be issued without a demolition permit, they simply file the demolition and the new permit at the same time, giving them a 100% chance of getting the permit ahead of anyone else.
That seems reasonable except that if you look at it from the signs company point of view…they can purchase nearby lots for $100 or less, so why would they want to give me anything fair? For the $100, plus cost of permits you outlined above, and a crane crew, they don’t have to give me anything…
If you are talking about a steel, monopole billboard, the cost of moving the sign is about $10,000 – not something they are going to want to do. You have thrown me for a loop with the lots in your area only costing $100 – what kind of area and sign is this exactly? I was assuming at least a 30-sheet on a monopole – are you talking about wooden signs are 8-sheets (about 6’ x 12’)?
Frank, they are both 14 feet by 48 feet and they are illumunated on a steel monopole in a V shape.I guess I didn’t make that clear enough in my first post.
Since the sign company rents the space for $9000 a month ($108,000/year)and each face is visible from one direction of the New York State Thruway. And the neighboring properties regularly sell for back taxes. In fact, to protect my interests, I just purchased the neighboring three lots for $8000 this year.
So if I now wanted even $7500 a year, why would they pay that, if I can be jumped for a ONE time fee of $10,000(moving it) as opposed to paying me $7500 each and every year…?
Again, I do appreciate your input, this site seems to be the only resource for information…
Are you certain that your location is still legal to build on? My experience tells me that it’s not. In cases like yours, where the spread is so large between land ownership and rent, the reason the sign company has not done what you’ve proposed is that they legally can’t. Most signs in the U.S. that rent for $9,000 per month are close-in urban locations that were outlawed decades ago. Check that out first.
That’s my feeling also (although certainly biased), because they have also offered to purchase at $60,000. So “jumping” certainly would be the cheaper option (if it was one)
However, we’re still at square one, whereas I’m trying to figure the best “win-win” number for myself considering the going ad rate. Much like earlier discussions concerning valuations of sign leases, this seems the same thing, but in reverse.
And Merry Christmas everyone…
Your approximate ground rent, based on normal industry numbers, should be around 20% of the revenue. That may help you nail a ballpark down at least. You have also already provided another bit of data. If they would buy out your lease for $60,000, then that would impute a groundrent of $12,000 per year, based on a 20% cap rate, or $6,000 at a 10% cap rate.