Most people start small and then think bigger over time. I’ve always found it better to think big and then work backwards to ascertain what you have to accomplish to get there. So here’s how that would work as far as building up a billboard portfolio to create a new income street.
What are you trying to achieve?
How big do you want to be with your billboard business? Some people are looking for $1,000 per month, and others $10,000+. That number will determine how many billboards you need to build or buy. Most billboards create a cash flow of around $3,000 to $5,000 per year. So if you want $1,000 per month you probably need to build or buy two or three, and then twenty to thirty if you’re looking for $10,000 per month. When I started out my goal was to be at $100,000 per year in cash flow (of course that was in 1982 dollars which would be equivalent to $270,000 in today’s dollars. So I needed around 100 signs or so to get there (and I ended up with 300 of them 14 years later).
How many signs do you need to hit that goal again?
So if you know how much money you want to make to be happy, then it all comes down to how many sign income units are required to hit that number. This is an extremely important point. You will quickly see the importance of volume to hit your target. It’s just building a stock portfolio, and you want that diversity for protection from the instability of any one market. Like a GPS system, once you know how many signs you need you can constantly determine your progress on the path to your goal.
How many targets do you have to hit that number?
Now is where it gets interesting. I always found that my best odds of success was if I could keep at least ten billboard deals in the air at one time. So I built an erasable board (I still have it) and I put black lines on it using tape and I made my entire goal simply to keep that board filled with potential billboard deals to buy or build. As they died due to lack of a permit or ground lease I would erase them off the board and then try to add another. I kept that board filled and it allowed me to build an average of two signs a month for nearly 14 straight years. I never knew which sign I would succeed at buying or building, but I had faith in the volume approach enough to know that – even if my luck was bad – I’d score at least 10% of the potential deals.
To start your billboard investing career, consider starting at the end of the movie and working backwards. It will help keep you focused and give you an idea of the amount of volume necessary to succeed.