One of the most profitable methods to make money with billboards is to find old abandoned ones and bring them back to life. But this “Frankenstein” strategy also requires careful planning and attention to detail. In this week’s Billboard Mastery podcast we’re going to review with granular detail the necessary steps to successfully make old abandoned signs income-producing again.
Episode 4: Billboard Frankenstein Transcript
We've all seen the movie Frankenstein in which the Dr. Frankenstein character brings a monster back to life, but did you know you can do that in billboards also? This is Frank Rolfe, The Billboard Mastery Podcast series. We're going to be talking about billboard Frankensteins. Situations where you take an old billboard and you bring it back to life and make it into something very profitable. So how do you do that? How do you bring an old, failed, abandoned billboard back to life? Well, the first thing you have to do is to find an old, failed, abandoned billboard. Now they're not always fully abandoned, but you can typically spot them for a number of ways. Number one, normally they have no advertisement on them at all or they have an advertisement on it that's clearly outdated, something that's faded, it's been up for so long, or the ad itself is damaged in some manner. Maybe it's ripped or torn or if it doesn't have a vinyl over it maybe one of the panels has fallen off.
You could just tell there's a general lack of care for the structure. Normally if it's made of metal there will be rust, if it's made of wood things would be broken and falling off, and you see these all around you. Whenever I drive down virtually any road or highway in the United States, I can't help but pass several of these old, abandoned signs.
So what do you do once you find one? Well the next step is to find out who owns the sign. Typically the best way to do that is to contact the property owner of the sign. Now you'll say, "Well how do I do that?" Well it's very easy. What you do is you find some building or feature near where that sign is located at which has a street address on it. Then you go to the tax assessor's office, typically online. You enter in that address and up will pop the owner of the property, the person paying property tax, and their address. From that name and address, you can go to that website like Switchboard.com and get their phone number. Then all you do is basically contact them either with a letter or a call and say that you're interested in that old, abandoned sign on their property and would like to talk to them about it. They'll normally always call you because right now it's not making them any money at all and it's kind of ugly and it's sitting there and it's every day looking worse, so it's not typically hard to get them to give you the call.
Now what do you do when they call you? Well what you're trying to find out is the story of the sign. How did it come to be there, do they know who owns it, do they own it or what's going on? So you're trying to check the chain of ownership. If the owner says, "You know what? Here's the story. That sign was built on my property 40 years ago by a billboard company and they just stopped paying me rent one day and I called them and my calls went unanswered and then ultimately the number was disconnected and so I just took the sign through abandonment because they left it on my property." Well now you know the story of the sign, or if they say, "Yeah, that sign is actually owned by Larry Smith but Larry hasn't rented the sign now in five years, so he probably would sell it to you for not much because it hasn't had an advertiser in a long time." Okay, there's another possibility. Or if he says, "Yeah, that sign was built 20 years ago and after 20 years the sign company wasn't having much success with it so they decided to go ahead and sell it to me and I own the sign." Okay, great. So the whole goal here is just trying to find out the history of the sign and who owns it.
Now the other thing you have to do besides find out who actually technically owns the sign is you got to figure out why it failed. Why is the sign sitting there on a highway, on a secondary street with a good location but no ads on it and nobody giving it any TLC at all? Well, here are some of the reasons typically those signs end up abandoned. First one, there's an obstruction to the sign. It could be another sign, it could be a tree, it could be a building. Some of those things you can fix. You can fix a tree, you can fix a premise sign which means a business sign in front of it. You can't really fix a building in front of it. So an obstruction is one way that they fail. Another way is that the market is just too weak or it's too weak for whoever was trying to rent the ad space so they ultimately gave up. So a weak market, that would be another reasonable reason for it to be abandoned.
Then maybe they were asking too much for the ad rent. Maybe the ad rent and all the other billboards around there is $500.00 a month and they were trying to get $1,000.00 so they just refused to ever drop the price and lo and behold the thing became abandoned. Or maybe the landowner themselves is the cost of the abandonment. Maybe they wanted too much ground rent. In some cases maybe they wanted more ground rent than the total revenue of the sign and so the sign company kind of gave up.
The key question is, can you fix these things? Is whatever made the last owner give up, throw in the towel, can you do a better job? Well if it's an obstruction the question is can I get it removed? I once bought an abandoned sign. It was in Downtown Dallas, phenomenal location, right in Downtown Dallas, but right in the middle of that sign, there was a sign that said park because there was a parking lot there. Right smack in the middle. A little sign on a metal pole, but it was right in the middle of the ad and because it was that way, the sign company couldn't rent the ad space.
I went to the guy who owned the little sign that said park on it and said, "Do you care if I lower your sign down?" To my amazement, he said, "No, I don't care at all. As long as I don't have to pay for it, you can lower it. I actually think it's too high now. See that big billboard blocks the visibility of it when you're coming from the other direction." Lo and behold the very obstruction that caused that sign to go empty was not that hard to fix. I've also done that on trees, I've had trees either trimmed back or removed, perfectly legal with the neighboring property owner's permission, because they want to get the trees trimmed back or they wanted that old big dead tree removed. So can you fix an obstruction? Next, can you fix a weak market? Well you can't make a market that's weak stronger. Maybe you could get more creative on how you rent the ad space. Maybe you could figure out an advertiser that even though that market is maybe a little weak, maybe there's somebody who still wants to advertise there.
Now if the asking price for the ads was too high, you can fix that. You can ask a lower amount so that's also curable, and if the ground rent was too high, you can perhaps renegotiate a lower ground rent. The sign's been siting empty for quite some time. Probably the guy that owns the land would like to get rent again, so that's probably also possible.
So if you find this old abandoned sign and you think you can bring it back to life and you think you can fix whatever happened to it last time, then the next key is to go ahead and get it under contract. So how do you do that? Well, you go to the property owner or whoever owns the sign and you get a bill of sale from them where they sell whatever rights they have in the sign structure to you and you also have to get a new ground lease signed. Now in some cases both agreements can be one in the same. You can do an agreement that's a ground lease and also comes with the fact that they're going to go ahead as part of the ground lease and sell you their rights to the sign or you may have to buy the sign from some sign company or individual that abandoned it because it's still in their name and then sign the ground lease with the property owner but either way, it's definitely a doable deal.
Now it's very important when you do this that you approach it in the right manner. Don't appear too excited about it. If you go to someone with an abandoned sign and you say, "Ooh, can I buy your sign? How much do you want?" and you sound excited, it sends a message to them that they're missing something. They might say, "Wow, I wonder as time has gone on maybe there's a way I can fix this sign?" So, "Ooh, I don't want to sell it now, I want to keep it." Instead, tell them, "Look, I found this old abandoned sign. The property owner says you own it. I know it's not good for much, but you know what? Maybe I can make an extra $50.00 a month or something with it." You want to really poor boy it. You don't want to go in like you're going to make a fortune off of it, that doesn't work. So you go to the sign owner and even in the case of the property owner, you want to go in not anticipating great riches from it because if you do they're going to take it away from you. Either they won't sell you the sign or the property owner is going to want a big rent for it.
It's also best on the property owner side if you can go ahead and get a ground lease that is based more on percentage than a minimum, because neither of you know really what will happen when you try and bring the sign back to life. Will it rent for as much as you thought? Or it will rent for a much lower figure? You don't know yet, so it will be a whole lot safer rather than committing yourself to a big minimum payment monthly or annually you do it based on revenue, the percent of revenue. That's a much safer way to go.
Once you get the sign in your possession either through the bill of sale from the old sign owner plus a ground lease or a ground lease that includes a bill of sale from the landowner, now the next step is simply to bring the sign back to life. So how do you do that? Well, some key things you need to know are number one, you got to make this thing safe and durable. So if there's things broken on the sign, it's an old telephone pole sign and one of the polls is broken, you got to fix that stuff, so that's consideration is safety. Definitely want to have safety involved in there.
Also you want to go through whatever your plan was. If obstructions are blocking it you want to get those obstructions corrected. One area that's always difficult for most people is the permitting process itself. Now if you're in a state area where there's a state permit required for every sign and this sign doesn't have that state permit, then basically you're dabbling in an illegal sign. Now that may have more or less penalties based on the state that you're in and you may say, "You know what? Based on those penalties for operating an illegal sign, I don't want to mess with it." Or you may say, "Well the penalties aren't that much and if they ever come to me and say hey that sign's illegal," I'll go ahead and tear it down. If it's in a city typically they don't have the same permitting process normally, so that makes it a little bit easier.
Also you got to figure out what is the plan with the sign. What am I trying to accomplish here? If what you're trying to accomplish is to bring it back and get out there and get the ad rented, well that's what your turnaround plan is going to be. Figure out a different way to market it. I once bought a sign that was in a really, really bad part of town but I knew it would be ideal for someone who was for example a bail bondsman. So I did a very large direct mail campaign to all the bail bondsmen in town and lo and behold, one rented the sign and stayed on that sign for all the years I owned it until I sold the sign off. You want to just enact your plan, you had a plan to turn this thing around and now the ball is in your court, it's time to work your plan.
Now plans never work out like we always thought in the beginning they would so you always want to have if you can a Plan B or even a Plan C so you can kind of maneuver around the realities of life, that things don't always work as you thought, so if you thought you could rent the sign for $300.00 a month and you can't get $300.00, well what's your fallback position? Is it $200.00, $250.00, can you still make all the numbers work? If your thought was you're going to go ahead and fix the sign back and the guy says "Oh you can't fix that last third of the sign," well, can you make that sign work as two-thirds the size that it originally was? If there were lights on it but you find out now there's no way to make the lights work, then you'd have to get a special electrical permit [inaudible 00:11:59] to do so, can you make the sign work as a non-lighted sign?
Dr. Frankenstein, if you've seen the movie, he works with all kinds of bits and pieces to create his monster also called Frankenstein. Sometimes signs are like that too. You have to take all the different pieces, all the cards that are dealt to you and put them all into one final component and that's what yields success but you can do it if you find the right property. So again, this is Frank Rolfe, The Billboard Mastery Podcast series talking about billboard Frankensteins. They're not scary, they're income producing, you can make a lot of money with them. This will give you some tips to get started and we'll talk to you again soon.