Recently we had a client who invested in placing a billboard on their property, and when it came time to sell realized a significant return because of the passive income it added to their real estate.
When most people think of real estate investing, they imagine residential rentals, commercial properties, or flipping homes. But there’s a less conventional niche that savvy investors can use to increase the income on their real estate: billboards.
Why Billboards?
Billboards are part of the advertising industry, a $10+ billion market in the U.S. alone. Brands pay top dollar to get their messages in front of drivers, commuters, and pedestrians. Unlike digital ads that users can scroll past or block, billboards demand attention. This consistent visibility translates into stable and often passive income for investors.
Most of the time, digital advertising companies will run the active advertising sales, and the real estate investor becomes their landlord.
Ways to Invest in Billboards
There are several approaches for real estate investors looking to diversify into this space:
1. Own the Land & lease to Billboard Company
This is ultimate passive income. If you own land in a high-traffic area (e.g., near highways or in urban zones), you can lease part of that land to an outdoor advertising company. They install the billboard and pay you ground rent.
- Advertising companies will often pay long-term leases—anywhere from $300 to $5,000+ per month depending on location and visibility. These leases typically run 5 to 15 years, with built-in escalations.
2. Lease the land and the Billboard
If you are up for a little more work, you can also own the billboard structure yourself. The benefit of this is that it allows you to potentially UPGRADE. If the traffic count is high enough, you may benefit from going digital, which allows much move revenue generation, and reduces the turnover costs for the advertising company.
- Look for revenue share, instead of a set amount for your billboard lease. This allows you to participate in the upside on your billboard. We have seen a 15% revenue share.
3. Buy Existing Billboards
Just like you can buy a rental property with tenants in place, you can buy a billboard that’s already up and running. These may be standalone investments or bundled with parcels of land. Often, these deals come with existing advertising contracts, making them turnkey cash flow opportunities.
- To sell a billboard separately from surrounding property is not very common, as they must then become separately deeded real estate. Most often properties are sold with billboards on them as a secondary income source.
Benefits of Billboard Investing
High Cash Flow Potential
Compared to traditional rentals, billboards can produce a higher ROI. A single static billboard can generate $3,000 to $60,000 annually, depending on the location, size, and traffic counts.
Low Maintenance
Once installed, a billboard doesn’t need plumbing, tenants, or HVAC repairs. Digital billboards might require periodic tech updates, but overall maintenance is minimal compared to real property.
Long-Term Leases
Advertising company leases often span years, giving investors predictable, recurring revenue with less tenant turnover than residential or retail properties. Expect leases that are 5-20 years in length.
Strong Demand
In an era of digital saturation, brands still see value in physical, real-world impressions. Billboard advertising has proven to be resilient, even in down markets.
What to look for if you want to develop a Billboard
1. Zoning and Permits
Billboards are heavily regulated. You’ll need to navigate local zoning laws, obtain permits, and sometimes deal with grandfathered rules for older signs. Some municipalities have moratoriums on new billboard construction.
- We had a client who purchased a landlocked parcel of land right along a highway, thinking it was the ideal spot for a billboard. However, it quickly got shot down on discovering that billboards are not permitted within close proximity of an on/exit ramp, which this property was. Always make sure you do careful due diligence if planning to erect a new billboard.
2. Traffic Counts and Visibility
Location is everything. A poorly placed billboard with low visibility or traffic can severely limit earning potential. Do your due diligence—invest in sites with high daily impression counts and clear lines of sight.
- Think of billboards as mini shopping malls- the more eyeballs it commands the more that can be charged in rent.
3. Technology Trends
Digital billboards can charge more for ad space, but they also come with higher upfront costs and more complex regulations. Static billboards may be cheaper to install but could offer lower margins.
- Whether a billboard can be one sided or two sided can make a large contribution to the overall return.
Final Thoughts
For real estate investors looking to diversify and generate passive income, billboard investing presents a unique, often overlooked opportunity.
While not without its challenges—like permitting, zoning, and capital costs—those who do their homework can turn a strip of roadside land into a high-yield, cash-generating machine.
Many of our clients embrace non-traditional investments so that they can obtain financial freedom for their families rapidly. Contact us today to discuss your strategy for growing your freedom.
Sources
https://billboardinsider.com/billboard-insiders-2023-list-of-out-of-home-equity-investors/
