Cell phone towers serve an essential function in modern society, and that doesn’t appear to be changing anytime soon. While cellular technology will inevitably adapt and advance, cell phone towers continue to be the most practical and efficient way to get cellular service to as many people as possible. Telecom infrastructure hinges on strategically-placed towers, ensuring that consumers can access high-speed cellular networks virtually anywhere in the country (and the world).
When a telecom company approaches you concerning a potential tower installation or buyout, you will want to know how much you can expect in return. Acquiring a cell tower valuation and appraisal is one of the only ways to accurately calculate how much you should be compensated.
But what exactly is a cell tower lease valuation? Who conducts valuations and appraisals? Finally, how can you be sure that you’re getting a fair deal on a cell tower lease or a lease buyout? In today’s guide, we will answer all of these questions and more, but first, let’s examine the real worth of a cell tower lease.
How Much Is A Cell Tower Lease Worth?
As you can probably imagine, it is impossible to put a price on a cell tower lease without first examining the details on a case-by-case basis. Every arrangement is slightly different and many factors can affect the value of your lease. For this reason, each lease should be evaluated based on certain criteria, ideally with the help of a cell tower lease consultant.
When discussing the actual worth of a cell tower lease, it is important to consider three different perspectives: the lease owner, potential lease buyers, and telecom operators. The lease will hold value to you based on how much it pays out to you each month and, if you decide to sell your lease, how much you can get for it. You may also have personal reasons to ascribe more or less value to a lease. How do you value a cell tower? Is it more trouble than it’s worth to host a tower on your property, or do you prefer to hold on to the monthly income?
Potential lease buyers will determine the worth of the lease on similar terms, although they will look at how valuable the lease will be in comparison to their investment in it. Finally, if you’re fielding offers from companies that want to install a cell tower on your land, these companies will have their own view of the worth of a cell tower lease. They will want to know how much return they can get on their investment by predicting the number of new subscribers they can acquire or the added value to their network.
Telecom companies will study these factors and then offer you the compensation that ensures they can still make a significant profit. Consequently, you’ll need to have enough information and professional guidance at your disposal to make sure that you’re not accepting any lowball offers on new leases or buyouts of existing cell tower leases.
So, what is a cell tower lease worth? It is still possible to look at aggregate data to get a general idea of what to expect. For example, the average monthly compensation for each tenant on a cell tower lease in the U.S. falls somewhere between $2,000 and $2,500. However, this covers a wide range of factors. You could be offered as little as $100 per month to keep a cell tower on your property, so these numbers may not be all that useful.
If you’re struggling to understand how much your land is worth to cell tower providers, try to ask some of the following questions:
- Is my land situated in an area with high population density? If so, you may be able to negotiate more for cell tower lease offers and buyouts.
- What are the zoning laws in my area? Complicated or limiting zoning laws may deter cell tower companies from engaging in an expensive contract.
- Do cell tower companies have alternatives, or is my land the only option nearby? This question is extremely important. If your land is in high demand, you can definitely negotiate better prices and choose the highest bidder.
You also need to keep in mind that companies often have the ability to terminate the contract at any time. So, while you might be able to have a steady income from a cell tower lease for decades, you could also have it canceled after a relatively short period. This piece of the puzzle is completely unpredictable, which is why many landowners choose to sell their leases to get a large payout now and avoid potential issues during a lease contract.
Cell Tower Lease Appraisal Models
If you’re looking to sell an existing lease or decide if you’re getting a good deal on a new lease, a cell tower lease valuation will help you determine how much the lease is worth on the open market. Appraising cell tower leases requires a keen understanding of telecom providers and the demand in your region. For this reason, it is best to get the help of a cell tower consultant who can accurately calculate the value of your lease before you make any decisions.
That said, you should still aim to understand how cell tower leases are appraised so that you’re not left in the dark. Here are a few of the most common appraisal models used by consultants and cell tower lease companies:
- Income Capitalization – Income capitalization is a useful method for all parties, as it calculates the value of a lease based on the income produced by the cell tower site. For example, if the appraisal determines that the cell tower can bring in as much as $100,000 per month for a telecom company, you can use this figure to negotiate fair monthly compensation.
- Discounted Cash Flow – Discounted Cash Flow (DCF) is a method that determines how much cash flow is provided from a given cell tower. This can include the costs of maintaining the tower and paying for the lease compared to the revenue the tower brings in. DCF appraisals often consider future changes in income and costs, making them one of the more accurate ways of predicting long-term lease value.
- Range & Traffic – There are ways to get a broad valuation of your lease without looking at dollars and cents. A tower that has an extended range and the potential to draw in large amounts of traffic will have a higher valuation than a tower with a small range or relatively minor traffic potential.
- Market Trends – Using market trends to appraise a cell tower lease is most effective if you’re considering selling a lease. For example, the introduction of 5G technology or the ability to make cell towers significantly smaller can all affect the future value of your cell tower lease.
All of these factors and methods help telecom companies determine how much a cell tower lease is worth to them. However, this does not guarantee that you will get a fair offer. This is where Nexus Towers lease consultants can help. We can use all of the same methods and extensive market knowledge to appraise your lease. Additionally, we can help broker a deal to maximize the sales price if and when you’re ready to sell your lease to the highest bidder.
Are you a property owner who has been approached by cell tower company to install equipment on your land or rooftop? Are you looking to sell an existing cell tower lease? Do you need help navigating an upcoming cell phone tower lease buyout? If so, be sure to contact the experts at Nexus Towers today!