What’s the value of $3,000 of lumber? Around $3,000. But not if it’s assembled into a billboard sign. Then it becomes an income property that can pay out dividends forever. So how is all that possible? What’s the story of wooden billboards?
What is a wooden billboard?
A wooden billboard is the original – and most primitive – type of road sign. Popular back in the 1920s, these signs are the most simple way to hold up a big advertising sign using telephone poles and plywood faces. The only other part used to build them are simple 2” x 4”s. A professional can build a wooden billboard in about one day.
What do they rent for?
Wooden billboards rent for about $200 to $400 per month per side. It’s all based on two items 1) the size of the sign and 2) how desirable the location is. That’s big money, as that’s annually around $4,800 to nearly $10,000 per year. You can build a good income stream from that.
Who needs them?
The typical advertisers for these wooden signs are traditional businesses that range from hotels and restaurants to car dealers and hospitals. These are advertisers that want to focus on their key market travelling down country highways and surface streets. They are also extremely stable, even in these Covid-19 pandemic times.
What do they cost to operate?
Wooden billboards only have a few expenses. The biggest one is the land rent for the ability to place the sign on the property. This is typically around 20% of the revenue. The other costs are repair and maintenance (not much) and insurance (not much). The advertiser typically pays for the printing and installation of their advertisement on a sheet of vinyl which is wrapped around the plywood faces.
How much do they make per year?
The total cost of a wooden billboard is around 30% of the gross revenue. As a result, the normal net income can range from about $3,000 to $6,000 per year. That’s a potential return on investment of 100% to 200% per year (compare that to your typical CD investment of 2%).
How hard are they to manage?
Billboards are well known for having extremely easy management hurdles. You can literally operate a wooden billboard on just a few hours per year. Here’s the deal. Advertisers are typically on a one-year contract. You only change out the ad typically once per year. There are no lights to make sure that they are on. You only send two invoices per month, and record in two checks. You only write maybe two checks per month on average. The bottom line is that wooden billboards are ridiculously low management.
How many can one person own and manage?
Here’s the great part. Because of low cost to build and low time to manage, one person can own and operate an army of these things. If you had ten of them you’d make $30,000 to $60,000 per year, and a hundred would be $300,000 to $600,000 per year. You get the picture.
Wooden billboards are an extremely low cost and effective manner to build a significant income stream. It’s amazing that there’s so much power in a bunch of lumber, but there is.