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Outdoor Billboards - The Top Success Factors That Most Beginners Don't Know

Guest post by: Frank Rolfe

Article Overview: 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.

Outdoor Billboards - The Top Success Factors That Most Beginners Don't Know

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 only have to remember the rule of twenty. This number is essential for three key reasons:

1. Never offer more than twenty (20) percent of the gross revenue. Many novices offer the landowner a much higher amount, like 30% or 40% to get the deal, only to find that they never make any money with it, and can't even sell it because other companies won't touch a lease much over 20%. Do anything to get the deal signed without going over 20%; you are much better off giving the landowner a signing bonus rather than an extra 10%.
2. Never want to build or buy a sign that offers you an immediate return of less than a 20% cap rate. This cap rate is the minimum threshold to compensate you for the inherent risks in this business. For instance, your sign can be obliterated with an obstruction, blown down in a storm, or your ground lease cancelled. You need to get 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 dealing with landowners, it's best to structure the lease so you offer 10 years with an additional 10 year option. If you build a billboard that will come down within 10 years, you have only achieved maybe three years of profitability, and that's not nearly enough to compensate you for your efforts.

So what happens if your deal comes up short in any of these three areas? Try to get it under contract anyway. That's right sign up every ground lease you can! After all, you can flip even a bad lease to a competitor for significant money. Billboard leases, even bad leases, are that rare.

Location Matters

Aside from the rule of twenty, there is only one real essential rule to making money in the billboard business that overshadows all of the others. And that is that 99.9% of making money in 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 lifetime, you can make a very comfortable income just flipping billboard leases and permits. I know people who have made a fortune doing just that, without ever risking a penny of capital themselves, and often just as a part-time interest.

With just these few tips, you are 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!

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Article Tags: keys to success, outdoor billboards, success factors
Referred by: http://www.mrlaundromat.com/



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