Outdoor Billboards: Top Success Factors Most Beginners Don’t Know About

I am often asked what are the keys to success when investing in outdoor billboards. There are really two parts to this answer. First, remember the rule of twenty. Second, spend all your time finding the right location.

The rule of twenty

If you want to be successful in the billboard business, you just have to remember the rule of twenty. This number is essential for three key reasons:

1. Never offer more than twenty (20) percent of gross income. Many newbies offer the owner a much higher amount, like 30% or 40% to get the deal, only to find out they never make any money on it and can’t even sell it because other companies don’t touch a lease much. more than 20%. Do whatever it takes to get the deal signed without going over 20%; it is much better to give the owner a signing bonus instead of an additional 10%.

2. You never want to build or buy a sign that will give you an immediate return of less than 20% cap rate. This capitalization rate is the minimum threshold to compensate you for the risks inherent in this business. For example, your sign may be obliterated by an obstruction, toppled by a storm, or your land lease terminated. You should earn a high level of compensation for all the time, effort, and risk of operating a billboard.

3. Never build a billboard with an expected life expectancy of less than 20 years. However, when it comes to landowners, it is best to structure the lease to offer 10 years with an additional 10-year option. If you build a billboard that will collapse 10 years from now, you’ve only achieved maybe three years of profitability, and that’s not enough to repay your efforts.

So what happens if your deal falls short in any of these three areas? Try to get him under contract anyway. That’s right, sign up for as many land leases as you can! After all, you can trade even a bad lease to a competitor for a significant amount of money. Billboard leases, even bad leases, are that rare.

rental issues

Aside from the rule of twenty, there is only one real essential rule of making money in the billboard business that dwarfs all others. And it is that 99.9% of making money on billboards is finding legal locations.

You will always make money if you can find legal locations. If you never build a single billboard in your life, you can earn a very comfortable income simply by changing billboard leases and permits. I know people who have made a fortune doing just that, without risking a penny of principal and often only as a part-time interest.

With just these few tips, you’re already in a much better position to succeed than others. It’s up to you to take action now that you’re armed with these insider secrets. Happy hunting!