Commercial Real Estate

2 Highly Overlooked (& Profitable) Commercial Real Estate Niches

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4 Articles Written
Phoenix, Arizona, USA downtown cityscape at dusk.

As we start a new decade, it is always good to look at doing something new and different. If you’re a real estate investor, maybe this is the year you invest in an asset unique to your portfolio—like a cell phone tower or billboard.

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2 Lesser-Known Types of Commercial Investments

1. Cell phone towers

The great invention: the cell phone. How I love thee and how I despise thee at the same time. Do you remember the Blackberry phone (also called a Crackberry, as a play on our addiction to it)?

When it comes to cell phones, we truly are addicts. Yes, they are amazing pieces of technology. They allow us to run multimillion—or even multibillion—dollar businesses from anywhere in the world (although Warren Buffet uses a flip phone only).

Cell towers only take a small piece of land to be set up and can generate thousands of dollars of rental income for the owner. As in all real estate, location, location, location is key.

What’s even better about this investment, you usually have a creditworthy tenant—one of the big phone companies, such as Verizon, AT&T, Sprint/T-Mobile (currently merging).

Bright sun shine over two cell site towers, radio and GPS transmitter and receiver, associated with electromagnetic pollution, with vibrant lens flare

In cell towers, making sure you have an organized lease and shifting all expenses to the tenant is key. You can almost structure the lease as NNN except for taxes, as sometimes it’s hard to subdivide the property just for a cell tower (and/or not worth the cost of doing so).

Related: Commercial Real Estate 101: Everything You Need to Know About Triple Net Leases

By choosing prime locations to invest in cell towers, I have been able to increase rents by 300 percent and from there another 5 percent. However, there are risks with cell towers, too.

For instance, with 5G coming out, there is talk that less towers or new tower types would be needed. It could also mean companies merging, again potentially equating to fewer towers needed.

As always, do your homework on the site, lease, and so forth.

2. Billboards

Billboards are amazing. Similar to almost all forms of real estate,  location, location, location is very important. I have seen billboard companies paying as much as $200K-plus a year for a billboard.

Again, it is very important to pay close attention to the lease. The lease can be set up as NNN except for taxes, due to requiring its own parcel. You can also add a profit-sharing clause into the verbiage.

If a billboard company puts up one of these megastructures—and especially if they go with a video sign—it may signal that they will be there for a long time.

Advertising fashion sale billboard in city night

Another thing to look at are zoning laws and so forth. These can change, but some billboard signs are grandfathered in (aka allowed to remain there if installed before a new law).

All in all, they make for a great cash-flowing asset that can produce high returns.

A Final Consideration

Financing is something to keep in mind, as it will likely function differently for cell phone towers and billboards than more common assets. Depending on your lender, financing may only be offered to fund 60 percent or less of the project.

Regardless, by choosing the right location and ensuring you set up the lease optimally, both of the above assets can cash flow well.

Would you consider investing in billboards or cell phone towers? Why or why not?

Comment below!

Roni Elias is TownCenter Partners, LLC lead asset manager. Roni has worked in litigation cases reaching over $9.5 billion in recovery. At his previous firm, he managed a portfolio of over $520 mill...
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    Spencer Anderson from Southaven, Mississippi
    Replied about 2 months ago
    Yes, I agree with both of those niches... But how do you TARGET them? In my experience with friends who have a cell tower on their property, it was just by chance that they owned the highest geographical point in an area. Do you have any suggestions on targeting location, location, location? Or just buy and hold land in rural areas with substantial growth opportunity? I am really interested in this subject!
    Roni Elias Investor from McLean, VA
    Replied about 2 months ago
    You can actually find some for sale on loopnet, I know who uses loopnet, Crexi and then they are some brokers who focus on this.
    Mary James from Willits, California
    Replied about 2 months ago
    I have a few questions regarding Billboards: I manage my parents trust’s rental properties, they also have rural highway & freeway frontage... Are we allowed to put up signs & sell / rent advertising space ?
    Nick Falcone Foreclosure Specialist from Grosse Pointe Shores, MI
    Replied about 2 months ago
    Mary James, Unfortunately the days of being able to put up a billboard are pretty much over. It is now difficult if not impossible to build new signs. Even the companies switching to digital signs have to remove so many of the old ones in order to put the new billboard signage in place even though they already have an existing billboard there. Too many billboards were going up in the 50's and 60's so heavy moratoriums were put in place. As for cell towers, it's all luck. I've had friends approached and they've received very lucrative contracts for cell towers, but I have not seen anyone successfully petition a cellular phone company. Doesn't mean it can't happen, just my experience.
    Roni Elias Investor from McLean, VA
    Replied about 2 months ago
    Hello, Mary. I would go speak to the local zoning office and ask can a billboard be put up on the trust property if they say yes. I would then ask the size of the sign allowed. Afterwards try calling out front media and or any other local media company. Tell them you got a great location for billboard and negotiate terms from there. Let's them just pay you monthly rent and handle getting approvals.
    William Moses from NYC
    Replied about 2 months ago
    Not sure how overlooked as I get 5 calls a day asking for a cell tower lease ( I purchase Cell towers & Rooftop Leases) You can also sell both these assets immediately for a substantial lump sum. Currently, cell towers / rooftop leases are trading for very high multiples. I have been purchasing these assets for over 15 years if you have any questions.
    James-Michael Mosley
    Replied about 2 months ago
    Question: I have about 10 acres that sit on one of the highest points in my area, how would I find a celluar provider to see if a tower can be put there? ...or will they find me, if the spot is right?
    Roni Elias Investor from McLean, VA
    Replied about 2 months ago
    I would reach out to your county/city zoning department and see first can you place a cell tower on your property.
    Jose Alvarado from Kissimmee, Florida
    Replied about 2 months ago
    How much you can charge and How many companies you can lease simultaneously if it's possible?
    Roni Elias Investor from McLean, VA
    Replied about 2 months ago
    Usually how we have done them. Is we have lease with 1 company AT&T or whomever. That tenant handles all costs, building the tower and so forth. Then they have the right to add more tenants to cell tower. I would try to structure a long term lease, yearly rent increases, NNN lease structure, and good amount as a late fee.
    Doug Johnson Investor from Frisco, TX
    Replied about 2 months ago
    Who is doing syndication in the Cell Tower or Bill Board space?
    Roni Elias Investor from McLean, VA
    Replied about 2 months ago
    I am not familiar with syndication but I know a couple of funds that just focus on this.
    James Dickens from New Iberia, LA
    Replied about 2 months ago
    A few random things here. How does Roofspace work? I'm guessing you have to own the building What about Radio Towers? Similar to Cell Towers and I know my W-2 leases a lot of Radio tower space for our comm frequencies. Cell Towers and 5G. Not many people are aware but 5G could have significant impact on Radio Altimeters in aircraft (Share a similar frequency space) and there is a large fight about to happen in Washington between the 5G companies and Aviation interests involving the FCC and 5G. If Aviation interests prove successful this could impact tower location in relation to an airport and air traffic. Helicopters (Flight Flight, Fire Fighting, Oil, and Gas, Tour) would be more affected than Fixed Wing (Airplanes) but there will be an impact to all involved. Just saying this may change the landscape on how and where towers can be placed and or used if they have 5G.
    James Dickens from New Iberia, LA
    Replied about 2 months ago
    They really need an edit button. It's not Flight Flight it's Life Flight/Air Medical.
    Tiffany McClurg
    Replied about 2 months ago
    I am the Leasing Manager for a large privately held tower company and one of the things we can do is manage and market your tower for you. You retain ownership but we take liability for the maintenance of the tower. And we market it to the carriers for you too. We sublet it so handle all of the paperwork, etc. If that part scares you, let's talk!
    Shari B. Investor from Sacramento
    Replied about 2 months ago
    @TiffanyMcClurg Where are you located or is your company operating nationwide?
    Tiffany McClurg
    Replied about 2 months ago
    We are nationwide.
    Jerome Kaidor Investor from Hayward, California
    Replied about 2 months ago
    I used to own a property in Stockton with its very own billboard. IIRC it made me a whopping $20 a month.
    Jessie Randolph New to Real Estate from Ohio
    Replied about 2 months ago
    I found a house for sale with a cell tower on it and I was told that the tower only pays for 1000 in property taxes. How do you negotiate higher
    Roni Elias Investor from McLean, VA
    Replied about 2 months ago
    Wow, a house with a cell tower. I would check the lease and see when the lease end or see if there is a way to renew a longer term with some price increase.
    Tiffany McClurg
    Replied about 2 months ago
    Definitely
    Charles Conroy
    Replied about 2 months ago
    Interesting article, but where do you even start with leasing land to a cell tower company looking for it?
    Roni Elias Investor from McLean, VA
    Replied about 2 months ago
    If your focus is land, then need to get zoning. You can start to reach out to each carrier and see if a need on your area
    Angel Dejesus Property Manager from Boston, Massachusetts
    Replied about 2 months ago
    Great read. Everything here is spot on. Would like to invest in these deals. Most seems to be bought in auctions. Looking to see how to get in. As the future of jobs and businesses are being created. NNN seems to be the way to go
    Roni Elias Investor from McLean, VA
    Replied about 2 months ago
    You can search sore for these assets. They are companies who just focus on these assets.