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    8 Replies Latest reply on Apr 11, 2009 9:44 AM by wilfin

    Need Loan For Constructing Billboards? Any Ideas?

    chris27tn Newbie
      This is my first post. So hello to all !

      I currently own (financed on 5 yr loan) one billboard that brings in $3500 a yr.
      The current advertiser is in the last year oh their 5 yr contract.

      Other area comparable billboards lease for $1000/mo.

      I have room for 6 signs for a total of 7 including the existing billboard.

      Several advertising companies have contacted me, but they only want to pay 30% to me.

      I'm hoping to find an available loan for this type of investment.

      My credit is down around 600. And I have less than $10k liquid.
      The last house i bought i was barely able to get financed due to this reason. (and economy)

      I cash flow plenty enough to live on, but I own a landscaping business to build my bank account so that I may continue to invest and build my portfolio.

      I have upwards of $100k total equity in my rentals & personal house but it i spread across them pretty evenly so a home equity won't really help me.

      I know I need to save up cash and raise my credit score but the state is quickly implementing new laws restricting billboard advertising. So I'd like to get something going in 6 months or less.

      Wow that was a novel, I hope no one fell asleep.
      Thanks in advance for any help or advice you can offer.
      Chris27tn
        • Re: Need Loan For Constructing Billboards? Any Ideas?
          LUCKIEST Guide
          Need Loan For Constructing Billboards, Welcome

          From what I understand, Billboards are a great industry to be involved in. Limited space and little competition.
          Do not understand why advertising companies only want to pay only 30% ??

          Do you have an Accountant?? It sounds like you are diversified. Have you or your accountant prepared a cash flow report?? If you are looking for financing, you need a Business Plan.

          Good luck, LUCKIEST
          1 of 1 people found this helpful
          • Re: Need Loan For Constructing Billboards? Any Ideas?
            BizSolutions Adventurer
            I may be able t help. How much funding are you looking for?

             

            Monique@accuratefinancial.info
              • Re: Need Loan For Constructing Billboards? Any Ideas?
                chris27tn Newbie
                Thanks for the reply.

                The total investment would be between $80,000 and $150,000 depending on billboard style, number of signs per pole and lighting.

                Assuming the signs are under contract with advertisers it will pay for itself in less than two years and average $60k to $80k a year (depending on length of contracts, billboard style and set pricing).

                The location of my land is on a busy stretch of I-24 East of Nashville, near the I-59, I-24 and I-75 splits.

                The billboards are regulated by the state and must be 1000ft apart or at least 1021ft if the sign is lighted due to the steel brackets for the lights extending 10.5ft outward.

                I currently have a permit for the one existing sign.

                As soon as I locate funding I will have 3 more permits ready for construction.
              • Re: Need Loan For Constructing Billboards? Any Ideas?
                bmt2008 Adventurer
                Couple of comments:

                First, with such a low credit score, you will be hard pressed to find any lender willing to take a chance on you.

                Second, the cash flow - even if you get 100% for the advertising, is not enough to support a loan of the size you are looking for. Especially, since ad spending is down in this market (why, for the life of me I can't understand why companies would cut advertising in any market).

                Lastly, if you could have contracts on these spaces in hand, it would tremendously help you secure some financing. Thus, lenders would look at the credit of your customer more than your credit - usually termed purchase order financing or accounts receivable factoring.
                  • Re: Need Loan For Constructing Billboards? Any Ideas?
                    chris27tn Newbie
                    Your comment on credit brings up another question.

                    If I formed an LLC would this seperate my personal credit from the LLC?

                    Is there any type of balloon loan I could get to pay off my properties and have just one business loan?

                    The reason for the low credit score is the amount of loans I have in my name from all my rental property.
                    I have never had a plus 30 or any negative hit on my credit.

                    Thanks for the helpful replys.
                      • Re: Need Loan For Constructing Billboards? Any Ideas?
                        SRBSRB Newbie
                        I have been in the billboard industry in Florida for several years, and would like to inform you that if billboard companies are offering 30% of gross collected revenues, that is a deal worth taking. At that land lease level, you would fair as well if not better than the billboard company. If they are making the investment to build the sign, they will be looking at 20%-30% of their revenues going toward financing, 5%-10% going to sales commision, 5% going to admin., 5% illumination, and 30% going to land lessor (you). Their margins on a particular sign would be around 20%-25%, taking into consideration an average occupancy level. Considering you will be taking on no risk financially, if you do not personally build the sign, this is a great return and will provide a nice residual income.

                        In regards to your a recent post about personal credit translating into a corporation, your personal credit record will certainly have an effect on if a bank will lend to you. They will be looking for a personal guarantee, unless you have a long standing business, with strong profits. The great think about the industry is that quite a bit of the value of the sign is in the land lease and permit (as well as the sign (asset)), therefore, an educated bank will usually lend a large amount of the requested loan amount with little collateral when compared to other industries. There are other alternatives; niche lenders. There are several lenders who specialize in the industry who will lend 100%, with no collateral other than the lease and permit, but expect to pay 12%-18% interest.
                        • Re: Need Loan For Constructing Billboards? Any Ideas?
                          wilfin Adventurer
                          Hi Chris,

                          Have you had any success in your search for financing?

                          www.wfginc.net