How To Buy An Outdoor Billboard

The only thing better than building a billboard from scratch is buying a billboard that is already built and operating at a great price. When you buy a pre-existing billboard, you don’t have the stress of having to build it, or the risk of something going wrong. In addition, you can see exactly what you’re buying and, in some cases, actually buy the sign for less than it cost. So how do you properly buy a billboard?

It’s all about the current numbers

The first rule is to only rely on current performance, not what the seller says the sign “could do”. If the sign “could do” better, the seller would have already done that. The biggest con is when the seller tells you that he could get a much higher rent for the sign, but he doesn’t have the time to really work the market. The truth is that he’s worked the market as hard as he can, and the rent you are seeing is 90% of the time the correct rent – all that the market will bear.

It’s all about your rate of return

You’re only buying billboards to make money (at least that’s the only reason you should be doing it). So the most important piece of information the sign holds is how much money it makes and, as a result, how much money it’s worth at a certain return on investment level. A good deal should have around a 20% cap rate of return (and a much higher cash-on-cash return level). There are billboard owners in Las Vegas that will try and tell you that their billboards are a great deal at a 1% cap rate because the economy is in a temporary slump. Don’t listen to anything other than the current performance – period.

Look at the length of the ground lease

As a general rule, you should never buy a billboard that does not have a ground lease that is longer than the amortization of your note on the sign. If you are buying the billboard with a loan that takes 5 year to repay, then the lease length must be at least five years. Otherwise, you could lose the sign before you even have it paid off. And just getting the sign paid off isn’t enough – you have to make money with it. Many billboard operators demand that the lease be at least 5 years longer than the note payoff.

Look at the right of termination

A long term ground lease is only as good as the right of the landlord to terminate your lease. If you bought a sign with a 15 year ground lease, but allowing for termination at any time, and the landlord terminates the lease a week after you buy the sign, that’s a disaster. So look not only at the length of the lease, but also the ability of the landlord to terminate.

Check the permits

It goes without saying that a billboard with no permit is worthless. Yet, many buyers fail to adequately research the permit through both city and state. Every sign should have a permit. A sign without a permit is essentially illegal – no matter how many years it’s been up.

Learn everything about the market

Never buy a billboard without putting in the time to be an expert in that market. You need to know every sign on that highway and what the advertiser is paying and what the ground rents are. You need to know if that market is on the way up or down, and if there are any road expansions in the future. You are investing a bunch of money in that sign – you better not rely on luck alone.

Don’t compromise on what you need

If your goal is to make 20% on your money, then you have to buy signs that currently produce 20%. You can’t buy signs that make 10% and hope that it will all turn out O.K. in the end. Math is not forgiving, 2 + 2 = 4 no matter how much you may wish that it equaled 12. So stick with the numbers you need, and don’t allow yourself to veer from that course. There’s nothing worse in the world than having to “feed” the negative on a billboard each month.


Buying billboards can be a very profitable venture. But you have to get some basic items in the bargain, for the deal to succeed. There are thousands of billboards in the U.S. to buy. Make sure to take the time and trouble to pick out the best ones for your portfolio – and avoid what doesn’t make money.

Frank Rolfe started his billboard company off of his coffee table, immediately after graduating from college. Although he had no formal training on the industry, he learned as he went, and developed his own unique systems to accomplish things, such as renting advertising space. Frank was formerly the largest private owner of billboards in Dallas/Ft. Worth, as well as a major player in the Los Angeles market.