How to maximize your cell site lease revenue

Posted August 12, 2014 by admin

Wireless Lease holders do not need a lump sum of cash nor do wireless lease owners wish to raise their taxable income. Why do land owners allow a wireless cell site to be placed on their property? Everything we do whether its working, investing or buying property is centered around building wealth for our families. Selling your wireless lease is no different. Over the years companies have come and gone with a fast pitch or a marketing idea that has left wireless lease owners reluctant to having serious conversations about selling their wireless lease. While it’s true most landowners do not need a lump sum they may be missing an opportunity to create wealth due to the overload of calls and letters. If you were told selling your lease would not raise your taxable income or over a ten year period a simple investment at 4% could double your revenue by selling your wireless lease would you listen? All leases should not be sold nor does Cell Site Capital wish to purchase every lease we see. Ask yourself- if your wireless lease could provide the capital below as it did for another client should you listen?

We recently completed a transaction similar to the example below. Many of cell site lease holders are surprised at long term value prospects of transferring their small monthly rent into a large lump sum. In one of our earlier blogs we compared the returns from the “big 3” tower companies vs. the S&P. American Tower (AMT), SBA Communications (SBAC) and Crown Castle International (CCI) have performed well over the past 3-5 years. We always suggest that our clients talk with their CPA’s or Financial Professionals about the telecom space. Below is used as an example of what a 4%, 6% & 8% returns could look like over the same 10 year period of a cell site lease.

 

Existing Lease Cell Site Capital Lump Sum
Monthly Rent $790 Monthly Rent $790
Income Tax Rate 35%
Monthly Tax on Rent $277 Gross Lump Sum Payment $125,002
Net Monthly Rent Received $514 Tax Payable at Cap Gains of 15% $18,750
Net Annual Rent Received $6,162 Net Lump Sum Payment $106,251
Escalator 15.0% Capital Gains Rate 15.0%
Cumulative After-Tax Rent Lump Sum, Reinvested and Increasing at
Year Rent Pretax Rent Net Cumulative Year 4.0% 6.0% 8.0%
0 $0 $0 $0 0 $106,251 $106,251 $106,251
1 $9,480 $6,162 $6,162 1 $110,502 $112,627 $114,752
2 $9,480 $6,162 $12,324 2 $114,922 $119,384 $123,932
3 $9,480 $6,162 $18,486 3 $119,518 $126,547 $133,846
4 $9,480 $6,162 $24,648 4 $124,299 $134,140 $144,554
5 $10,902 $7,086 $31,734 5 $129,271 $142,188 $156,118
6 $10,902 $7,086 $38,821 6 $134,442 $150,720 $168,608
7 $10,902 $7,086 $45,907 7 $139,820 $159,763 $182,096
8 $10,902 $7,086 $52,993 8 $145,412 $169,349 $196,664
9 $10,902 $7,086 $60,080 9 $151,229 $179,510 $212,397
10 $12,537 $8,149 $68,229 10 $157,278 $190,280 $229,389

Give us a call today and let Cell Site Capital help you maximize your cell site lease.

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