Tower Genius’ 5 Pros and Cons of Installing Cell Towers on Your Property… I remember my dad telling me back in 1999, son.. these cell phones are just a fad, I don’t think cell towers will be around for too long. I’m glad I didn’t listen to him, as I launched my career in wireless infrastructure leasing and development.
Fast forward to 2020 and beyond, our cell phones have revolutionized the way we live, shop, communicate, and are part of our everyday lives to an extent that we would not have imagined at the turn of the millennium. They are not just phones, they are mini computers transmitting voice and data. They are devices that we manage our finances with. They are cameras and camcorders. They are navigational tools. They have countless and limitless uses.
Ask any Gen-Z kid how many friends they called on their phone this week and chances are they will say none. Since rarely talk on their phone devices, they are using phones to transmit data. The demand for wireless spectrum and demands placed on cellular networks and cell phone networks keep growing exponentially. Due to this insane demand, more cell sites and towers will need to be built for 4G, 5G and eventually 6G.
To fulfill this need in both urban and in rural areas, industry experts are saying about 1 million 5G cell sites and tens of thousands of macro cell towers need to be deployed in the USA to meet demand.
There has never been a better time to become a cell tower landlord and lease your property to a cell tower company like SBA Communications, American Tower or Crown Castle International or rent rooftop space to DISH, AT&T, T-Mobile Sprint or Verizon Wireless. As with everything there are good and bad things associated with renting out space for a cell tower or cell site. Let us see what those pros and cons are:
Pros of Cell Tower Leasing
First, let us see the advantages of placing a cell tower on your site.
You Become a Landlord and Collect Rental Payments for 25 Years to Life
- Becoming a cell tower landlord and leasing unused space is a great use of your land or building. We have answered hundreds of blog questions on our other website about cell tower lease rates and how rental prices are determined so we won’t discuss that here. It is possible to figure out the value of your proposed tower lease on your own. Or you can hire an expert like Tower Genius to provide you with that valuation. Nevertheless, your cell tower lease rental stream can potentially pay you for a lifetime.
Cellular tower management companies and carriers usually pay you two different ways:
- Rental model – rental payment is made on a monthly or annual basis. An $18,000 a year cell tower lease will pay you $1,500 per month.
- Lease buyout model – payment is made in cash lump sum to the landowner and property is leased for a set period of time, usually in the form of a perpetual easement. Rarely are they buying your land outright. They are paying you for an easement, the right to collect your rental payments, of 25, 30, 50 or 90 years, or usually “in perpetuity” aka, forever. Expect to get a fraction of what the deal could be worth. For example, if you have a $1,300 per month ($15,600 annual) rooftop U.S. Cellular lease, you might get an offer for 13.5 X of the annual payment, or $210,600 for selling a perpetual easement for the rooftop lease revenue stream.
Improved Cellular Signal Quality
- Having a cell tower nearby usually ensures that you receive excellent quality cellular signals. Wireless telephony improves quality of life. Even the loudest opponents of 5G and 4G have a smartphones, we have yet to meet one that doesn’t.
Cons of Cell Site Leasing
We have discussed the major pros of getting a cell tower installed at your site. Now let’s look at a few cons as well.
Signing a Bad Cell Tower Lease Agreement of Buying a Building With an Unfavorable Lease Agreement
- Cell tower lease agreements are month to month contracts that landlords can almost never break easily and they are typically at least 25 years in length, and more recently can be 50 years or even 90 years in duration. We strongly recumbent not signing a lease that exceeds 25 or 30 years although there can be exceptions to that. Once your landlord is encumbered it’s going to stay that way for a long time. If you buy a building or property with an existing wireless lease, just because you are the new owner, it doesn’t entitle you to renegotiate the agreement. If you bought a lemon, you’re stuck with a lemon.
Selling the Lease For A Lump Sum Can Lead To Difficulties When Selling The Land Or Building
- Cashing out of a cell tower lease for a lump sum payment has its benefits but it can also cause you to have to accept a lower selling price when selling the property or building. This is especially the case with rooftop cell sites. When you purchase a building with a rooftop cell site where the previous owner has cashed out the lease, you as the new owner do not have the ability to negotiate a new deal with Verizon Wireless, T-Mobile, Sprint or AT&T. You still need to grant them 24-hour access. You have all the inconvenience of having a rooftop cell site installation and zero benefit besides good coverage in the area. So you’re likely going to want to factor that into your purchase price.