There are a lot of billboard options in America, ranging from giant steel monopoles to smaller 8-sheets mounted to walls, but there are a range of choices that cost $5,000 or less. These options include 1) wooden telephone pole units 2) vinyl wallscapes 3) 8-sheets on metal poles and 4) 8-sheets mounted to walls. There is no greater investment option based on rate of return than these billboards and, if not, I challenge you to let me know what that option is. So what type of rates of return should one expect?
8-sheet steel monopole costing around $2,000
An 8-sheet is a 50-year old type of billboard that can be found abandoned in many urban areas. They were built as part of liquor and tobacco advertising long out of favor by national advertisers, and the companies that owned these often just left them where they were when the ad contracts ran out. In many cases you can buy these from the old sign companies or, more often, from the property owner who has basically taken control of the sign by virtue of abandoned property laws. These have two sides typically and these ad faces rent for around $200 per month utilizing a vinyl wrap. This creates a revenue of around $400 per month with costs of around $1,000 per year for land rent, and another $1,000 for ad production and/or installation, repair & maintenance and insurance. That leads to a grand total of around $2,000 per year, which is roughly a 100% annual return on investment (compare that to 1.5% per year on a CD and 2.5% on a stock dividend – that’s 50 times greater per year).
8-sheet wall scape costing around $1,000
This is the version of the above sign category that is not supported by a steel monopole but is, instead, attached to a side of a wall. These only have one advertising face, so they only have half the revenue of the above example. However, they also cost less, so the rate of return is about identical. The biggest problem with these signs is installation, as it is harder to wrap them with vinyl so make sure that you can accomplish that before you buy it.
Wallscape costing roughly $3,000
With these type of billboards you basically attach a printed vinyl advertisement directly to the wall of a building. You essentially drill stainless steel hooks into the masonry wall and the vinyl is then stretched between them. These type of signs cost around $3,000 complete. In good locations, these type of signs, the rental rate is around $500 per month or more. When you take out the operating cost, the net income is around $3,000 per year, which again is around a 100% annual rate of return.
Wooden telephone pole billboard costing around $5,000
These type of signs are the oldest of all of the above options, having been prevalent on American roads since the 1920s. The design is simple: you drill holes in the ground and insert and concrete in wooden telephone poles in a straight line (typically three), then nail wooden 2” x 4” stringers across the poles, and attach plywood faces. Advertisements are printed on vinyl and then wrapped around the structure. These type of signs come in both a one and two-sided format, but new ones are almost exclusively double-sided. Because they are typically out in more rural areas, they rent for around $2,500 per year per side and, when you subtract land rent, installation and insurance, net around $3,000 per year. This represents a return on investment of around 60% per year. But that’s only in rural areas. Over time, these exurban markets will gain population and traffic count – and ad rates – yet the costs remain constant. I once had a sign like this that generated $2,000 per month in profit.
These low-cost types of billboards often have extremely high rates of return. That being said, you have to know what you’re doing to build, buy or operate them. But a good billboard clobbers most all other forms of investment as far as rates of return. Have you considered this investment option?