However, even an expert real estate investor could make the biggest mistake most property owners make. That being they value a cell tower lease as a real estate asset and not a telecom asset.
Real estate investors will usually look only at the rent being collected as the primary way to determine the value of a cell tower lease.
Why is this a mistake? Well every cell tower has a different values even if its rent is the same as one right down the street.
A real estate investor should focus on the value of the cell tower to the telecom tenant they are leasing to not what that tenant is currently paying in rent.
What are some of the questions a real estate investor should be asking?
- What amount of revenue is the tenant receiving from the use of the tower?
- What is the importance of the telecom equipment on the tower to the tenant’s local wireless network?
- What local zoning and permitting restrictions exist that may restrict construction of a new tower in my city?
- What is the cost to the tenant if they want to relocate the tower to another property.
Being able to determine the true value of a cell tower lease can get a real estate investor the maximum value for the cell tower lease. Also, knowing the true value of a cell tower can keep a real estate investor from paying too much for a property with an existing cell tower on it.
Without telecom industry experience, it would be most difficult for a real estate investor to review a cell tower lease and accurately determine the cell tower’s value.
The best way you can make sure that you value a cell tower lease correctly is to enlist a telecom expert to determine the true value for your cell tower lease. If not, you could be risking hundreds of thousands of dollars.
Remember, the telecom companies have experts working for them, shouldn’t you?