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Leasing Land

Leasing Land

Leasing Land for a Cellular Site

I especially like to post topics on unusual or alternative ways to make money from land. Everything that I have posted so far are things that I have done myself first-hand. Here is one opportunity I was not involved in at all, but it’s a great success story.

Gaining the highest and best use from land is the goal. Most of us tend to think of subdividing or platting the property to do it, but there are other ways to monetize dirt and this one really worked for the landowner – leasing land for a Cellular Site.

Background

A brief review of cellular networks is needed first. A cellular network consists of our respective mobile phones and the stationary infrastructure needed to successfully pass mobile call radio waves from one cell site to another.

The cell sites are positioned on land, buildings or other structures within the cellular network. Each cell site must be geographically located so that it integrates signals with other cell sites, providing continuous and reliable wireless service. Lack of a seamless integration results in scratchy or dropped calls and other irregularities. Some municipalities require cell sites to be concealed for aesthetic reasons, but there are plenty of cell sites that are clearly visible when driving down almost any road, almost anywhere. The distance between cell sites varies based on a multitude of factors, but location relative to other existing cell sites and elevation are key considerations.

Cell Masts / Cell Towers

The main difference between a cell mast and cell tower is how high up the antenna dishes must be placed to do their job, as well as the overall structural engineering necessary to accomplish it. Masts are typically shorter and more economical to build, while towers are generally much taller and beefier, which translates to higher cost.

Cell Site Land Lease Opportunity

The privately-owned land this event centers around happened to be ideally situated for a cell site. This was mostly because of location due to topography. The location was ideal since the proposed cellular mast would triangulate perfectly with the existing cell sites in the area and there was a high spot from which the towers’ dish antennae would angle downward to interconnect and pass radio waves to and from the other cell sites.

The cellular provider had contacted the owner, who up to that point was completely unaware of the potential gold mine he owned. My understanding of the negotiated deal was for the parties to execute a long-term lease for the land to place a cell site mast, along with suitable easements in favor of the cellular provider for access, utilities, inspections, repair and maintenance. All permitting and construction costs were to be borne by the cellular company and they indemnified and held harmless the landowner from liabilities related to their improvements, maintenance and operational activities. Should the cellular site be decommissioned in the future, the provider would demo the site and reclaim it largely to its original state. There were probably other provisions in the agreement, but as mentioned earlier this wasn’t one my personal deals.

According to my sources the end-result was a $15,000 per month long-term lease agreement with the landowner!

More opportunity?

Multiple cellular companies sometimes place antenna off a common tower to save on infrastructure costs and minimize visual blight. It seems to me that a wise Lessor of land for a cellular site should look to place contract covenants so that additional sub-lease fees can be collected from other cellular companies that eventually place antennae on the tower. 

Thinking more about leasing dirt in general

This kind of win/win agreement is a perfect example of what can happen if a land owner looks for different ways to generating revenue from a land holding without developing and selling it outright. In this case the landowner was not aware of his potential good fortune and was just lucky to be in the right place at the right time. Nonetheless, it was a great example for me to start thinking about land leases in general and all the ways to potentially profit from them.

Besides cellular sites, what about leasing for permitted parking lots, agricultural crops, billboards, tree farms, pasture land, auto lots, landscaping supplies, fruit stands, roadside retail, or monthly overnight parking for service trucks in strategic locations? A wise person should be careful to consider the risks associated with land leasing such as environmental and overall liability, but if the landowner is knowledgeable and careful there might be opportunity to allow the business of another to be conducted on a property owned, through a lease arrangement.

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