Cell Tower Land Lease Rates: Questions to Consider Before You Sign on the Dotted Line
There’s no doubt that in the coming years there are going to be more and more cell towers erected all over the country and the rest of the world. Billions of people use mobile phones, and their use is becoming more widespread all the time. With the need for more towers, more property owners will be contacted to lease out their land to cell companies to build those towers. If you have been contacted by a cell company to lease your land, then it can be a great way to earn a passive income. However, negotiating cell tower land lease rates and figuring out what is fair can be tricky. There are many things to consider, and many factors that can have an effect on the rates. Here are some questions that you should have in your mind throughout all of your dealings with the mobile phone carrier to make sure that you get the best deal.
What is the Lease Rate?
This is probably the most basic question, and the answer is what you will eventually tell your friends when you brag about having a cell tower lease on your property. Cell tower leases can be very lucrative, but do not just jump at the first offer. Make sure you take that number and do some research in your area to find out if it is a fair market deal. While the initial offer may seem great to you, you may be missing out on some value if you do not do some research.
Is There a Bonus for Signing on?
If you have an especially desirable property, the mobile carrier may offer you some sort of signing bonus. It could be a lump sum of money, or it may be something such as paying for attorney fees. It’s great if they offer it upfront. However, if they don’t, you can also try to negotiate to get one.
What is the length of the Lease Term?
How long the term is for your lease will help determine what your lease rate will be. The mobile carrier’s offer will be dependant on that, along with your property’s location. Again, this is something you can negotiate.
What Type of Escalation Rate Are They Offering?
An escalating rate is a percentage that the lease rate is expected to rise on a yearly basis. It can be anywhere from 1% to 8%. All too often, landlords do not even consider the escalation rate when negotiating a lease. However, the escalation rate can have a major impact on the profitability of the venture. Do not take the escalation rate lightly. If you are unsure of what an appropriate rate might be, contact a cell tower lease consultant or attorney to help.
Is There a Right of First Refusal Clause?
A right of first refusal clause means that the mobile carrier can have a say in any sale of your property. If you put your property on the market, they can legally purchase it at whatever terms you get from a potential buyer. This may, in fact, make it hard to sell your property if buyers know that there is a possibility that their offer will be matched.
Sometimes, the mobile carrier will try to take advantage of these clauses. They are often unclear and if you are not certain about the details, you may lose out. Discuss with a consultant or attorney to help you understand what is in the right of first refusal clause, and how it might affect any future sale of the property. You may be able to get the clause to apply only to the lease itself, and not to the sale of the property as a whole.
Getting the best cell tower lease rates takes knowledge and patience. There’s absolutely no reason to jump at the first offer. It may seem like a lot of money, but you could get an even better rate by doing some research and asking the right questions. You may want to hire the services of a consultant, but before you do, you can get as much information about the offer as possible so that you are going through the process with your eyes open at all times. Ask a lot of questions of the mobile carrier, and especially ask the ones listed above.
After gathering every scrap of information you can, contact a cell tower consultant or attorney. There may be more information to be gleaned, and they will know more about cell tower lease rates in your particular market. As they examine your offer, they can help negotiate the best possible deal for you. The key is to never be in a rush and to ask the right questions. By jumping on the first offer, there is no doubt that you will be leaving money on the table.