Did you know your Self-Directed IRA can invest in Cell Towers & Billboards
Cell towers are a great investment for your self-directed IRA because
1) It’s easy for a first-time investor.
2) More than one company can be paying rent to your IRA each month.
3) Rent is paid by a company so the income is more reliable and timely than other investments.
4) Cell towers are constantly being erected because the demand for their service is so high.
5) The renter, not the self-directed IRA, is responsible for any additional costs, like permits, maintenance, operating costs, etc.
6) Once a tenant is secured, they typically stay as long as possible.
To educate our readers on not only cell towers, but billboards as well, we interviewed Michael Bloxton who has been in the industry for over 10 years. Click the link at the bottom of this article to read the full interview.
Tell us a little about your company (how long you have been in business, areas of expertise, etc).
Mark Roscioli and I have been in the cellular finance industry for over 10 years each. We have participated in millions of dollars in transactions and own several pieces of real estate because of these cellular leases. In total there are only a handful of people who even understand what we do and even fewer who have created the type of success we have.
What products and services do you provide?
We provide property owners that have existing cellular leases the ability to take a significant cash payment for the rights to their cellular lease or more often than not, we give them an offer for both the property and the cellular lease that is better than the market.
Tell us some stats about you or your company (closed deals, average close time, negotiation experience/stats, how many sales/purchases made within the last year, etc.).
- In the industry 10+ years each
- Closed nearly $100M in transactions
- We buy situations – getting from intro to option signed can take 1-6 months on average
- From option signed to funding roughly takes 45-90 days
- We’ve held positions from Sales, VP of National Finance Group and Director at several of the large, Wall Street funded financiers
Are there reviews about you and/or your company online?
You can find info on a deal we did in the New Jersey Herald. We purchased Skylands Ballpark. Google “Skylands Ballpark NJ Herald” and you should see it.
How is your company different from others?
We focus on real estate investing leveraging the cellular assets. Anyone else in this space focuses almost exclusively on the cellular lease without any interest in the underlying real estate.
Are you and/or your company on any social media sites that offer continuing education?
Currently, we offer an information product on exactly how to do what we do at CellTowerGold.com for the “Do It Yourself” readers. For licensed real estate agents we have a program at USACellTowers.com.
What is your business philosophy or mission?
We believe that there is always an opportunity for those willing to work toward it. We use this as a way to work with clients, investors, vendors, and partners.
INVESTING IN CELL TOWERS & BILLBOARDS
Tell us about your service area. Are there any “hot” or “popular” investment areas right now?
Being that the USA has a well-developed cellular network, we find that deals can happen anywhere from coast to coast. With that said, New York City and Los Angeles County have been “worked” quite rigorously and while deals can be still found there competition might be fierce.
What are the benefits of investing in a cell tower or billboard?
Unlike most real estate investments, cell towers are true “NET” leases on top of being infrastructure assets. NET meaning the tenant takes care of absolutely everything including most of the difference in property taxes increased due to the asset and they even up their rent per negotiated escalations without a reminder. By infrastructure, we are implying that this asset, due to its core revenue generation to the parent company, is less likely to be affected in any market-related reaction. In many ways, it has more value and better ROI than the stock of the company itself.
What is the average cost for a billboard and/or cell tower investment?
The average cost of a cell tower is between $200,000 and $300,000. Billboards vary widely.
Does my self-directed IRA purchase the land, or just the cell tower and/or billboard?
This depends on the deal but most often you are purchasing shares/units in the ownership entity that owns the rights and/or an “easement” underneath of the leased area on the property. The easement essentially gives you real estate ownership rights without actually owning the real estate.
What is the average potential return on my self-directed IRAs investment in a cell tower or billboard?
Again, this depends on the deal but it is safe to assume that a single site can earn an average IRR of 5-8% over several decades. If you are investing in a pool of assets that are to be executed in the secondary market than 10-15% in 2-3 years can be expected. Our offering is closer to that of a Real Estate backed annuity with principle protection, think “income for life”.
Should I have an exit strategy when making this type of investment?
These leases have less than a 1% cancellation rate nationally. You should know whether this asset is part of a pool of assets or it is a single investment for the long term as mentioned above. With that said, we build exit opportunities into our transactions.
Is there a type of cell tower and/or billboard you prefer or recommend when making this type of investment?
Getting a deal at the right price can make the variations in the type of site worthy of investing. With that said, knowing the credibility of the Lessee’s company, the relationship between the tenants on a single property and the economics all come into every purchase decision.
Is there a type of lease that you prefer or recommend when making an investment in a cell tower or billboard?
Verizon, AT&T, and Sprint are some of the best tenants you could ask for with a solid record for low cancellation. Multi-tenanted towers also make for one of the best long-term investments.
PAYMENTS AND PROFITS
Is my self-directed IRA responsible for any maintenance, annual charges, etc.?
At this time there are no participation fees once a deal is funded outside of monthly management which is taken directly from the cellular revenues, not you.
What if the tower or billboard isn’t working or need repair? Is my self-directed IRA responsible for fixing it?
Not only are you not responsible for fixing cellular towers in need of repair but you’re not allowed to per the lease. This is often the same for Billboards but again, Billboards vary widely.
Is it true this investment allows me to have more than one company pay my self-directed IRA?
The standard scenario will be no when investing into the entity that holds the real estate or easement, or a pool of assets. In the case you’re IRA is purchasing the easement directly then yes, if the asset you are investing in has multiple tenants then yes, it is true. However, it is also true that multiple companies might be on a single check if one company sells to another such as MetroPCS selling to T-Mobile.
Who pays rent to my self-directed IRA when investing in a billboard or cell tower?
Typically the entity in which holds the real estate or easement will be paying the rent checks to your self-directed IRA.
ROLES & RESPONSIBILITIES
How do you determine a good location for a billboard or cell tower investment?
Due to the well-established infrastructure already present in the USA cellular network a cell tower investment is good if the numbers make sense. To reiterate, we are specifically investing in existing cellular leases on properties and since the USA is very well built out it is unlikely to get a carrier to build a new tower.
Am I responsible for finding advertisers and tenants for the billboard or cell tower?
No. The existing cell tower or billboard already has a negotiated lease backing your purchase.
What role do you play before the cell tower or billboard is purchased?
We are looking for partners and investors for the many deals we come across. We participate in every deal by managing, purchasing, or brokering the investment or a combination thereof. Therefore, we are highly active in the initial evaluation ongoing management and future value of every single deal that comes across our desk.
What role do you play after the cell tower or billboard is purchased?
Typically we are managing the payment, negotiations and the execution of the asset once initially purchased. We handle all communications regarding the cellular asset to ensure high satisfaction for all parties involved which includes their needed access, upgrades etc.
What kind of information do you provide to the area or financials of the investment, prior to committing to the purchase?
Depending on the purchase structure we will provide was is normally expected in any real estate transaction such as financials, lease agreements, and other standard due diligence items.
Can I buy a piece of land and get you to put a billboard or cell tower on it?
No. The USA market is full and nearly at capacity. Getting a carrier to spend half a million dollars on a tower just because you have the property is not likely. They have an army of people who decide exactly where their antenna needs to be and at this point, there aren’t too many holes in their network.
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