How to Get Started in the Billboard and Billboard Lease Business

Flipping single family homes is a thing of the past, and it’s time to examine other real-estate oriented options for more fertile territory. One area that is often …

Flipping single family homes is a thing of the past, and it’s time to examine other real-estate oriented options for more fertile territory. One area that is often overlooked is outdoor billboard media—basically big signs that advertise located on highways and roads. These old, giant players in the advertising world are suddenly becoming the darlings of media buyers the world over and creating some exciting opportunities for aggressive individuals who are willing to play.

Getting licenses

To enter the billboard business, you only need a few pieces of equipment, and they are all relatively inexpensive. The first is a license from the state or city you are going to look for locations in. Many states and cities do not require such licenses. In those that do, the cost is nominal, maybe $200 per year. You can find out if the state you are in requires such a license by contacting the department of transportation or by inquiring at city hall. Normally, the requirements for a license are not difficult—there is no testing. You may need a bond, but that is readily attainable from your insurance company, and the face value is marginal.

The tools of the trade

The other pieces of equipment you will need are the sign ordinance, the zoning maps, a tape measure and a “roller wheel” measuring device that allows you to measure long distances on foot. All of these parts together should cost under $100, and will last for years. Of course, you will also need a car to get around town.

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Finding sites

The business revolves around finding billboard sites and getting groundleases and permits for them. You literally have to start on each road or highway at one end of the city limits and go to the other end, carefully scanning your zoning maps for tracts of land that have the allowable zoning and spacing between signs. The Highway Beautification Act of the 1970s established minimum distances between signs, so you need to consult your particular state and city for those guidelines.

One of the best places for a new entrant to look for locations is on the fringes of town. As you get farther out of town, the competition for locations declines, and you can often find new locations out on this periphery. Of course, they will not rent for as much as the signs in town, but remember that, as the city grows, one day you will be in town, too.

Flipping groundleases

When you are first starting out, one of the best ways to create value is to “flip” your groundleases and permits. Basically, you take the location you have put together and sell it to an established competitor. How much will you get? Prices range from $5,000 to $200,000 or more, based on the value of the sign location. You can use this capital to later fund your first billboard that you keep, or you may elect to remain a sign locator who just sells off his inventory to bigger competitors.

If you elect to keep the billboard site, you can obtain financing from banks, but they are often reluctant to make loans to someone who has no existing experience. A better bet is to obtain funds from a outdoor leasing company. These companies understand the collateral and are more apt to bet on a newbie. You can find these lenders on the internet.
If you keep the billboard, you should be able to pay it off within 7 to 10 years, and then keep the cash-flow for the life of the sign.

The bottom line

With an up-front, out-of-pocket investment of a few hundred dollars, and the ability to make thousands in profits—even hundreds of thousands—it is hard to beat the billboard business. And with two of the Forbes 400 billboard billionaires (John Kluge and Arturo Moreno) and a host of famous folks who got their start in the industry (think Ted Turner), shouldn’t you give it some thought?



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