The value of something is more than just a monetary figure; it is its worth and importance to you. Think of what you could do if you received a substantial lump-sum of money from a cell tower buyout. If you own a small business, could you use the money to expand and increase your revenue? If you run a non-profit, how many more people in the community could you reach? If you are retired, how would your quality of life and that of those you love improve?
Whether you seek the advice of a professional or rely on your own experience, there are countless ways you can invest your money to give you a return significantly greater than the amount of periodic cell tower rent you might receive from your site lease.
Furthermore, in the same way you know your business, we know ours. Just as you might turn to a real-estate broker to help you buy or sell your home, it makes sense to lean on the expertise of seasoned wireless industry professionals to maximize the value of your cell tower lease. Whether it is providing the correct market value for your buyout, renegotiating an expiring cell site lease, or bringing new wireless carriers to your property, you can financially benefit from our deep market knowledge and long-term partnership with you.
BASELINE: INVEST YOUR CURRENT SITE RENT
Let’s take a look at apples-to-apples investment scenarios comparing typical site rent to some alternatives available with a lease buyout, also known as a prepayment.
To establish a baseline example, say you receive $1,000 per month and your cell tower rent increases 15% every five years. If you were to invest your entire rent check every month at a healthy 7% rate of return, and you think there is only a 1% chance your wireless lease might be terminated in any given year, your invested cell tower rent stream might look like this over time.
ALTERNATIVE: PURCHASE AN INVESTMENT PROPERTY
Now let’s assume you receive a cell tower lease buyout of $120,000 and are then able to use that as a 20% down payment on a $600,000 investment property with a 5% interest rate mortgage. You would now have a tangible asset with equity that is no longer subject to any kind of “termination”.
Furthermore, if we assume a realistic investment return (CAP Rate) of 6%, an annual increase in property value of 5%, property taxes of 2%, and a property rent increase of 3% every year, your invested lease buyout could look something like this over time.
ALTERNATIVE: PAY DOWN DEBT
Whether it’s a personal loan, credit cards, or an equity line of credit, paying off debt can not only be a huge emotional relief, but also one of the most impactful ways of using your $120,000 lease buyout. Let’s assume you have borrowed money from various sources with a blended 11% interest rate (for reference, the average Annual Percentage Rate for variable rate credit cards is over 15%*).
The chart below illustrates how much money you would save over time by using your cell tower lease buyout to reduce your debt.
*According to Bankrate.com 10/29/2014
ALTERNATIVE: INVEST IN YOUR BUSINESS
If you own a business or want to start one, there are countless ways you can use a cell tower lease buyout of $120,000 to help it grow. You might secure a small business loan, hire an additional employee, increase marketing efforts, upgrade back-office systems, open a new location, you name it. You are in charge and know how the money could be used best.
If you achieve a 10% return by investing in your business, this is the impact your lease buyout could have over time.
ALTERNATIVE: INVEST FOR RETIREMENT
Many cell tower landlords are counting on their rent check to cover expenses in their retirement years. Not only is this an extremely risky approach, considering the very real possibility that the cell site can be terminated or the rent is reduced, but there are other established retirement strategies that can bring a greater and much safer return.
Let’s say that by working with a financial planner you are able to put your cell tower lease buyout to work gaining a 9% return. This is how a well-managed investment plan might compare over time.
The information in this chart is provided for illustrative purposes only and does not constitute investment advice. It is also not an offer to invest or to provide management services. The information is subject to correction, completion and amendment without notice. You should always consult with your own investment, accounting, legal and tax advisers to evaluate independently the risks, consequences and suitability of any investments you might make.