Leasing out your property to cell phone companies for installing their tower can be a good additional source of income. However, it is fraught with many risks and only cell phone tower lease experts can safeguard your income from such a lease. The five major risks in leasing your property for cell phone tower installation include:
- Longevity in business of the tenant – If you lease your property to a cell phone company, the longevity of your income is directly dependent on the same of the company which is your tenant. These companies taking properties on lease for installing their tower are classified as tier 1, 2, 3 and 4. They may last or get acquired by other providers, you never know. That is why you need the services of an expert consultant.
- Lease termination rights of the tenant – As a leaseholder, you need to be very careful in knowing the termination rights of the lease tenant. Read the termination section of the lease agreement that details the rights of both parties to lease termination. Unfortunately, it favors the tenant in most cases and the worst part of it is that this is the expected norm of the industry for their long-term growth. In case the technology changes and cell towers become obsolete, the service providers of mobile telephony would go bankrupt.
- Consolidation and mergers in the industry – Perhaps the biggest risk to the continued inflow of income on account of your cell tower lease is that of consolidation in the industry. When two wireless service provider companies merge, the expenses of both companies are consolidated. This has already rendered thousands of cell phone towers redundant. Bear in mind that since 2004, four major wireless carriers have consolidated. More acquisitions and mergers are foreseeable in the future as that is the trend with maturing of markets.
- Obsolescence of current technology – The current technology can always be replaced by a better one. Moreover, the towers themselves can become obsolete. It is always likely that wireless carries eliminate locations rather than spend on updating their old technology. This trend can be witnessed in major carries.
- Rent demand too high – You can never be sure about the right rent to demand from the wireless carrier. Guard against negotiating too much for the rental rate, lest it becomes a case of prohibitive rent cost, i.e. rent too high to be economically feasible for the cell phone company.
With expertise in their domain,
cell phone tower lease experts help to minimize these risks for you.
