Most property owners and real estate investors do not have billboard income for one of two primary reasons. First, the local city sign ordinance prohibits the construction of an outdoor billboard on the property. Alternatively, if an outdoor billboard is permitted, the property owner does not know how to get billboard income.
The Benefits of Outdoor Billboards
As a property owner, there are a couple benefits to having a billboard. The first advantage is extra income the billboard generates. A billboard is like adding another tenant to your property except this tenant is like a triple net tenant. This leads to the second advantage which is no out-of-pocket cost.
Assuming you have a viable billboard location, major outdoor advertising companies such as CBS Outdoor, Clear Channel, and Lamar Advertising are willing to pay for the permits, construction costs, and maintenance. You have no expenses with a billboard and receive billboard income for allowing one of those companies to build and operate a billboard on your property.
The third advantage of having a billboard is the fact that the tenant is long-term. Billboard companies choose their locations carefully. Once they choose a location, they need sufficient time to recover the initial investment and then generate a profit. If your location fits their criteria, you can rest assured they want to be there for a long period of time.
How Much Can I Make?
This really depends. The key driver of billboard value is location and traffic. A highway billboard generates more income than a wooden pole billboard in a small town. If your property is in an ideal location, you may even have a bidding war for your location because only one billboard can be built by one company.
In general, expect to receive somewhere between 15-20% of the gross revenue per year. If you’re not sure how much this is, you can call the outdoor advertising sales departments of these companies to see how much they would charge you to advertise in your area.
How Do I Get a Billboard?
First, you need to check with your local city planning department. Don’t just ask them if they permit a billboard. Instead, ask to see the local sign ordinance and read through that section from beginning to end. You are reviewing the sign ordinance to see if billboards are explicitly prohibited in the sign ordinance. The sign ordinance is black and white. Either the ordinance will prohibit billboards or they will permit them.
Assuming the sign ordinance permits a billboard on your property per local zoning, the next step is to attract a billboard company. In some cases, the billboard companies will proactively seek out property owners for desirable locations. However, you’re actually going to have more success if you do the research and promotion yourself.
All of the major outdoor advertising companies have a method for you to contact their real estate division either by email or phone. If you have a potential billboard location, they want to hear from you because their real estate department cannot be on top of every possible location.
While a billboard may not generate as much income as your existing tenants, the tenant is long-term and hassle free. In addition, the rent per square feet is much higher than any other tenant because the only space a billboard takes up is the small footprint where the pole was inserted into the ground. Given all the benefits of having an outdoor billboard, I am confident the extra billboard income will bring a smile to your face every time you deposit the rent check into your account.
By Martin Fisher