Curious about how much you could receive to place a cell tower on your property? Want to calculate the total value of your cell tower lease agreement?
The number of cell tower leases continues to grow in the US, thanks to the rapid advancement of 5G and technology. Many property owners, municipalities, churches, schools and business owners have considered adding or renegotiating a cell tower lease agreement.
The question then is how to calculate the cell tower lease value? In other words, how much are cell tower leases really worth?
As the nation’s leading cell tower lease consulting firm, we understand that though calculating your yearly rent is as simply as multiplying your monthly rent by twelve, property owners need to consider several other factors to determine the overall value of a lease. They also need to consider if the amount of rent they are being paid is truly representative of what their property is worth. More often than not, the answer is no — unfortunately, property owners are underpaid by thousands of dollars every year.
Cell Tower Rent Formula
Calculating the total value of a cell tower lease is fairly straightforward for the cell tower company. They make an offer that looks like this:
Monthly Rent Rate x 12 x Number of Years in Contract = Total Revenue
Once a cell tower company determines where they want to put a tower, they contact the property owner. They offer a deal that they think the property owner will accept. When negotiating with them, you have to remember that their job is to get you to accept the lowest offer they can. By underpaying you, they make more profit.
Short-term Value Considerations
What a cell tower company will not offer is the information about what other options they may have for the cell tower. Your land may be the only viable place for a new tower, but they wouldn’t want you to know that because that would give you leverage in negotiations. Without that knowledge, you may accept a lowball initial offer.
These offers are frequently made by a 3rd party broker. Knowing who the employer is can also be a factor in negotiating higher rent. Our team at Vertical Consultants can help arm you with the right knowledge to capitalize on your cell tower lease offer.
Cell tower contracts are often for a 30-40 year term. They are incredibly difficult to renegotiate once agreed upon and landowners can rarely terminate them. However, the tower company usually makes sure these contracts include language that allows them to terminate at any time. This makes the contract very one-sided in favor of the cell tower company.
It’s important to remember that you are potentially agreeing to a 40-year contract. The rent you receive today will be considerably less valuable by the end of the contract.
Consider this: $1,000 today will be worth less than $400 in 40 years.
If you fail to properly account for inflation, then you will be significantly underpaid and you and your family will feel the impact for decades.
Additional Impact & Risks
Landowners also need to understand the other risks associated with these arrangements in their cell tower lease agreement calculations. Will there be tax implications? Restrictions on future land use or sale of the property? Who is responsible for liability? Are there zoning laws that need to be considered?
At the end of the day, cell tower lease valuations vary greatly. It is ultimately the property owner’s decision if the value has been appraised correctly. While cell tower companies have lawyers and team members in place to assist with these negotiations, too many property owners try to tackle them on their own.
Before making a long term commitment and decision, tell us about your offer. We will provide a free market report and let you know if the offer is fair or not. Our report is free and no commitment is required. If we can help, we’ll let you know. If you already have a great offer, we’ll let you know that too.