Cell Tower Lease Buyout: Everything You Need to Know
You may be familiar with the concept of cell towers and how they transmit mobile signals, but have you ever thought about why those cell towers are in the spots that they are in? Mobile carriers have precise mathematical equations that tell them where towers need to be to provide the most coverage possible. However, in a lot of cases, the towers need to be on private property. How would you feel if someone placed a large cell tower on your property? You probably wouldn’t be too pleased, but luckily there would be something in it for you.
Cell Tower Lease 101
That’s where a cell tower lease comes into play. A mobile carrier pays a lease to property owners who own the properties where those companies want to put towers. These can be pretty lucrative for property owners, especially if they weren’t using that space to begin with. However, there may come a time when the owner is offered a cell tower lease buyout. This is when another party, usually one that purchases leases, will offer to buy out the lease and assume the responsibility. The property still stays in the owner’s hands, but the lease payments will no longer go to them.
Why Take a Cell Tower Lease Buyout?
Why would an owner want to do this? Cell tower leases can bring in an incredible amount of passive income, and the lease acquisition companies will not offer full market price. Usually, an owner will agree to be bought out because they need or want a quick infusion of cash for one reason or another. This could be to pay down debt, or because they have hit harder times, or any number of other reasons.
In some cases, an owner will take the cash they get from the buyout to invest in another business, or to make investments elsewhere. In fact, sometimes, they may be able to get a better return on the investments long-term than they would have gotten from the lease payments. Everyone’s financial situation is different, so there are many reasons someone might accept a buyout.
If you are someone who already has a cell tower lease, then you are no doubt aware of all of these facts. However, if you are considering a buyout, there are several things that you should know before you start the process. You do not want to get stuck with a bad deal and not absolutely maximize the amount you get.
Negotiating the Buyout
For one, never forget that you can negotiate the price and terms of the buyout. The representative from the lease acquisition company will no doubt be trying to buy for the lowest price, so there’s no harm in trying to get the highest price possible. That price will also change depending on how much of the lease you want to sell. Do you have 85 years left on it? You don’t have to sell the entire 85-year lease if you don’t want to. You can sell a certain number of years, after which the lease will be returned to you. By doing this, you will get less money upfront than you would if you sold the entire lease. Very few take this path since it means less money, so you will have to weigh this carefully.
There is a market for these leases that can fluctuate, just like the housing market. You want to make sure that you are getting a buyout at the best possible time. For instance, if two mobile carriers are merging, and you are leasing your property to the smaller one, then you will probably have a tough time finding a buyer. It means that there is a chance that the cell tower on your property will be shut down, and buyers might be scared off by that.
Transferring the lease can take one of several forms. It does not have to be that you hold your land and just the lease is taken over. Some property owners find it more worthwhile to simply sell the entire property and wash their hands of the whole thing. Other owners might negotiate an agreement with an easement attached. Many just transfer the lease and nothing else changes and the purchaser has no legal access to the property. To decide what is best for you, it would be a good idea to talk with a cell tower lease consultant.
A cell tower lease consultant is someone who knows the ins and outs of the cell tower lease business and can advise you as to what would be in your best interests when selling a cell tower lease. This person is not a friend or family member from whom you get advice. It is a professional who has education and experience and is able to provide expert guidance.
Make sure that when choosing between cell tower consultants that you do not simply hire the first one you come across in an internet search. Do some research and ask some questions. Find out how much success each of your potential consultants has had helping their clients. There is no harm in requesting references. Ask them about their experience and success stories. Hiring a consultant should be treated like hiring any contractor or other service. You want someone you can trust, who will do what’s best for you.
As you can see, there’s a lot more to a cell tower lease buyout than you may have thought. Make sure that you have all the information possible so that when you enter into the process you can make the most informed decisions that are in your best interest.