Are you considering a cell tower lease buyout? Not sure whether or not this is the right decision? Well, you’re not alone. And don’t worry—we’ve got your back! As one of the best cell tower lease buyout consulting companies, we can guide you so you make a decision that’s in your best interests. Below are three things you should consider before selling your cell tower lease:
#1: Do You Require An Immediate Lump Sum Payout?
When you sell the lease, you’ll receive cash, either in installments or as a lump sum. So how is payment size determined? Well, let’s assume you earn $1,000 monthly as rent. Assume that the rent increases by a nominal 3% year on year. This means your lease has the potential to fetch around $437,500 over 25 years.
However, if you were to cash out today, you’d receive the minimum buyout price in the $200K – $220K range. As you can see, deciding to move forward with a cell site lease buyout depends on what you could do with $200K cash now vs. collect the rent long-term.
At the end of the day, you need to ask yourself: Do you want an immediate lump sum of cash now or do you want a the negotiated monthly rent that you could get consistently for years? And of course, the way you answer this question will largely depend on your financial circumstances. If, for example, you require a lump sum to cover a significant expense that’s coming up, it’s potentially better to opt for the buyout. And of course you should talk to you financial advisor. Perhaps you will want to explore the possibility of doing a 1031-exchange with the proceeds of the lease buyout transaction.
Even when you don’t need immediate cash, there are other reasons which justify accepting a cell tower lease buyout, including:
#2: The Tenant Has The Right To Terminate The Lease With Just 30 Days Notice
There is no guarantee that the wireless company will continue paying you rent for years down the line. While this is unlikely to happen any time soon for most cell phone towers especially the ones in rural and in suburban settings, there’s the increased possibility that cell tower leases in big, densely populated urban areas might start becoming a lot less valuable sooner than you think. The wireless carriers AT&T and Verizon namely have lobbied successfully in Washington DC to be able to install 5G small cell nodes where there is fiberoptic cable installed underground in public ROWS (Right of Ways). And they were able to get the US Government to make it their policy to allow these carrier to only pay $270 PER YEAR RENT to the city or the county to install a 5G node or cell site. This is what will impact rooftop cell sites leases in the urban areas. So you might want to sell if you are worried about the future viability of your rooftop cell site lease.
There have also been examples in the past where companies, like Nextel, Metro PCS and Sprint were acquired and decommissioned most of their cell sites. So, you cannot predict what will happen to your lease five or ten years from now.
Consider the age-old saying: A bird in the hand is worth two in the bush. The cell phone tower lease buyout payout is your “bird in hand”. Do you want to cash it in now or take the risk of going after the birds in the bush (long-term rent)?
#3: You May Not Receive The Full Potential Of The Lease
Can you guarantee that you will continue living in your current home over the next ten or twenty years? What if you want to live elsewhere? You might want to be closer to family or in a cozy retirement community eventually.
The US Census Bureau states that only 37% of Americans live in the same house for more than ten years. If you see a possible change of location in your near or distant future, the best option is to go with a cell site lease buyout, as this way you get something instead of nothing.
Cell tower lease rent reduction companies send out “rent guarantee letters” where you lock in your rent for five years or slightly more. But if there is a drastic technology change that impacts the values of all cell site landlords, once that 5-year guarantee is over, you can probably kiss the cell tower rent goodbye, that is why we recommend that most cell phone tower landlords should never give a cell tower lease rent reduction or rent guarantee. If the fear of the cell tower technology changing and impacting the value of your cell phone tower rent, that’s okay, then just sell your cell tower lease, take the buyout and let somebody else worry about it.
Require More Cell Tower Lease Buyout Information?
Reach out to Tower Genius. We’ve helped hundreds of clients close buyouts for cell tower leases with huge payouts. Contact our cell tower lease experts to discuss your payout options our number is 888-313-9750, press option 2 for buyouts.