Getting a company to install a cell tower on your property can make you feel like you just won the lottery. After all, you don’t really have to do anything. Once the lease agreement is signed and the tower is installed, you can start collection your payments each month. For many people, this is a great way to supplement the costs of maintaining property and enjoy the benefits of a passive revenue stream. So, if you have that golden ticket, why would you ever consider giving it up?
Contrary to popular belief, cell tower leases are not quite as great as they seem at first glance. While it is true that you can monetize your property with virtually no effort on your part, there are plenty of caveats and factors to consider. Each lease is different, but there are a few common issues that are making cell tower leases less lucrative and sustainable for property owners.
In today’s guide, we’re going to look at a few of the main reasons you should consider accepting a cell tower buyout offer if and when it comes your way:
Secure Your Revenue
Accepting a buyout means that you get a lump sum in exchange for signing over the lease to someone else (the buyer). Naturally, it’s important to do the math and talk with a cell tower consultant before taking an offer. That said, the risks associated with holding onto your lease for as long as possible are typically far more costly than the risks of accepting a buyout now.
These risks can even be seen in recent headlines. Take the merger between T-Mobile and Sprint, for example. This merger allowed T-Mobile to greatly reduce the number of cell tower sites. MD7, the company hired by T-Mobile to manage its cell tower leases, sent out letters requesting restructured agreements to thousands of people. Even worse, many property owners got termination notices in the mail, effectively ending their leases with absolutely no option to sell or renew.
This was an especially tough pill to swallow for the people whose leases were terminated. Many of them had million-dollar offers on the table just a few years ago, but they held onto their leases to keep the monthly revenue. Now, they’ve lost their leases and their buyout offers. This is one of many cautionary tales for property owners; if you accept a buyout offer now, it could help protect you against unforeseen circumstances in the future.
Protect Against Future Technology Changes
Mergers aren’t the only potentiality that can put your cell tower lease at risk. Technology is constantly changing, and at an ever-increasing rate. What is relevant and profitable now may be completely obsolete in just a few years. Cell phones became popular in the mid-90s and wireless technology has come a long way since then. Who’s to say that cell towers will even exist in a decade or two? And even if they do, they may take a completely different form that renders your property unusable.
This is something that has even affected smaller wireless providers. Bigger providers have the resources to invest in infrastructure throughout most of the country, even if there’s a chance that the tech will change in a few years. Unfortunately, this makes it very difficult for smaller providers to remain competitive, which also impacts people who host cell towers on their property. Think about it: if there are fewer providers willing or able to invest in cell towers, rates continue to sink while opportunities for lease renewals become less and less common.
5G Towers Are Paying Less
This brings us to the declining lease rates for 5G cell towers. Just a few years ago, a cell tower in a densely populated area could easily bring in a couple thousand dollars per month (if not more). Today, the landscape of cell tower leasing has completely changed. It’s not just about low competition among national wireless providers, either, as they are not always the ones initiating the cell tower leases. It also has to do with the rapid advancement of 5G technology.
Since 5G sites now require much less space than they did before, the companies initiating leases simply aren’t willing to pay out as much. Moreover, 5G tower tech allows companies to place their equipment on utility poles and utility lines, reducing the need to negotiate substantial leases with property owners at all. So, if you have a lucrative lease with a 5G tower right now, count yourself lucky (and consider any buyout offers while you can).
Getting passive income every month is great, but when you don’t really know if and when the checks will stop coming, it can put a damper on your financial plans. On the other hand, if you take a lump sum now, you have capital to invest in a diversified portfolio, high-yield savings, real estate, or a business. Naturally, what you do with the money is completely up to you, and that’s the point. A large buyout offer can open up a whole new world of possibilities to you and your family.
Getting a large sum of money gives you much more freedom to invest all at once, potentially setting you up for life. With monthly payments from a cell tower lease, you don’t get this same flexibility. Not only are the payments much, much smaller and spread out over time, but they are also not guaranteed. You could have a cell tower lease for 12 months or 12 years. Since you have no way to protect your lease or treat it as a long-term investment, it’s safer to just take a good cash offer now and enjoy greater financial freedom.
Why You Need A Cell Tower Consultant To Guide You
We’ve discussed a few of the top reasons to consider accepting a cell tower buyout, but again, you shouldn’t just blindly take an offer without consulting with an expert. A buyer could easily lowball you or turn around and sell the lease to someone else at a higher price. Either way, you need to have someone on your side that understands cell tower leases. More importantly, you need to consult with someone who can negotiate on your behalf, calculate the real value of your lease, and even field multiple offers.
This is why you should consider Nexus Towers if you’re on the market to sell your cell tower lease. We can provide you with help from consultants who are well-versed in the industry. Our experts know how to structure a lease buyout in a way that is the most favorable and profitable for you. At Nexus Towers, we can help you at every step of the selling process, from appraising the value of your cell tower lease to fielding multiple offers and finding you the best deal on the market.
Are you a property owner who has been approached by cell tower companies to install a new tower or buy you out of your current lease? Are you looking to sell an existing lease? Do you need help navigating an upcoming cell tower lease buyout? If so, be sure to contact the experts at Nexus Towers today!