While having a cell tower lease is a great way to earn significant side-income for landowners, they come with their set of advantages and disadvantages. For example, once you lease your property to a cell tower company, the contract will usually last for a duration of 25 to 50 years. The industry standard for a cell tower lease is 25 years. This is both good and bad. Cell tower developers do not want to spend $250,000 (not including the cellular equipment) and take two years or more to lease and build a tower that has to be taken down in ten year’s time.
Tower Genius, the USA’s premier cell tower lease consultation company for property owners and landlords has shared the most obvious pros and cons of cell tower leases below with a good look at cell tower leasing rates in 2020.
The Pros of Cell Tower Leases
- Before we get into the disadvantages of having a cell tower lease, let’s have a look at the obvious advantages. (Hint: Money… Lots of Money.)
Significant Side Income If Done Right
- We like money. You like money. We’d all like more. 🙂 The most obvious benefit of having a cell tower lease is the additional cell tower rental revenue you’ll generate by leasing your unused land or rooftop space whether its residential, commercial, or industrial in nature.
An “average” cell tower lease can generate anything from $900 – $1,000 per month depending on your location. It is important to note that cell sites in major metro ares pay more and the rural sites tend to pay less. In the Idaho Panhandle for example, we saw a cellular carrier paying farmers in remote areas $100 per month, while two hundred miles north we’ve seen rural single carrier cell towers paying over $2,000 per month. Cell tower rents usually increase by 10% to 15% every 5-year terms, or by 2% or 3% percent every year, depending on the terms that are negotiated. And the cell tower leasing representatives are incentivized to pay you less.
- While the typical average cell tower lease contract lasting 25 years, a 25-year cell tower lease starting out at $600 / month escalating at 2% annually will generate approximately $230K while a $2,000 / month cell tower contract escalating at 3% annually will pay about $645K over the lifetime of the agreement. It pays to get sound advice when negotiating a cell tower lease agreement.
Almost No Maintenance Required
- One of the biggest advantages of leasing your land to a cell tower company is that you will almost never have to worry about maintenance costs.However if you don’t structure the USE and MAINTENANCE provisions of your cell tower contract you could experience problems down the road. In a perfect world, cell tower landlords will have no headaches. Being a realist who has been in the industry literally since its inception, we know that things go wrong, and cell tower landlords need to pay attention to the fine details of the lease.
So if you think you’ll never have to worry about repairs, upgrading the property or spending any money, that is true as long as your lease agreement is properly structured.
Maximum Use of Unused Space
- As a building owner, leasing your rooftop for a cell tower or cell site antennas can be a great way to maximize the use of your building. You do need to pay attention and work closely with your roofer when the site is installed and also pay close attention to the details of your lease agreement.
A cell tower company usually requires a 100′ x 100′ portion of land to build a tower and a cellular carrier usually asks for about 50 -150 square feet of rooftop space to install a cell site.
Cons of Cell Tower Leases
- Some of the biggest “cons” in the cell tower leasing industry are our competitors. Seriously, if you asked them to watch your cash register, they would probably not even take money out of it, they would take the deed to your property as well. 😀 But seriously, while there are many benefits of renting your property to a cell tower company, but there are also many potential snafu’s you need to watch out for. Here are a few of the disadvantages.
Encumbering Your Property For A Long Time
- As mentioned earlier, a tower lease contract can last up to 30 years and many crazy proposals we are seeing ask for as many as 99 or 100 years. Moreover, you can’t terminate. Landlords will not be able to terminate the lease agreement unless the tenant defaulted and did not cure the lease default by breaking the lease terms or failing to pay you the rent.
Many people are not comfortable with the long-term encumbrance of a cell tower lease agreement which is perfectly understandable.
Hidden Costs – Devil’s in the Details
- Watch your tax language closely. Also if you sell your cell site lease watch your tax language ever close. These future tax assessments can come back to bite you.
- Some carriers require cell tower landlords to get their own insurance.
- Cell tower landlords need to pay attention to electrical meters, electrical sub-meters and reimbursements if they are a part of your contract. Cell sites are energy hogs.
Need Professional Help 😀 ?
- Professional cell tower lease help that is… Do not sign an agreement with a cell tower leasing company without knowing the full terms of the contract. There are many things to consider and you could end up getting into trouble down the line if you didn’t read the terms thoroughly.
Don’t go it alone. If you’re not sure what your cell tower lease is worth, contact the experts at Tower Genius today and let us help you find the true value of your land and the cell tower rent rate you should be getting.
Call Steve or Kevin at Tower Genius today at 1-888-313-9750.