Seth: Hey there folks, this is Seth Williams and welcome to the REtipster Podcast.

Today, I'm gonna explore the fascinating world of cell phone towers and how we can find and capitalize on this unique opportunity as real estate investors. So in this episode, we're joined by a guy named Hugh Odom, who is the president of a company called Vertical Consultants, a firm that specializes in cell tower leases across the U.S. And with over a decade of experience as an attorney for AT&T, Hugh brings a wealth of insider knowledge to the table, sharing insights into the rapidly evolving cell tower industry and how property owners can benefit from it.

So what you're listening to is a pre-recorded interview that I did with Hugh, and I hope you'll join us as we dive into this world of cell phone towers with one of the industry's leading experts.

Let's dive in. Hey Hugh, how's it going?

Hugh: Great, Seth. Thanks for having me today and talk to you.

Seth: Why don't we just start out by learning more about your background. So how did you get into this business exactly?

Hugh: Well, I was originally a real estate and corporate attorney with a very large firm out on the West Coast. And about five years into that I got recruited by AT&T and headed up their real estate throughout the Western United States for almost 11 years.

And kind of interesting fact there, AT&T, at one point, was the second largest holder of real estate in North America. They had more real estate holdings through ownership, leases, easements, et cetera. So there's a wide portfolio. So held that for almost 11 years and then transitioned into forming my own company back in 2010, Vertical Consultants.

And what we do is we help property owners and negotiations of cell tower leases, rooftop leases, et cetera, all across the country. Everybody from individual property owners all the way up to some of the largest corporations in North America. So we have a ride wide variety of clientele and it's been a interesting ride from being an attorney for all those years and then starting a company almost 13 years ago and going from zero clients to now having clients all across the United States.

Seth: Wow. I had no idea that AT&T was such a big player in real estate and that's mostly through easements and leases. That actually makes sense. I've got a property right now that has a AT&T lease going right through it. Is that pretty much like all of the roadside power poles and lines that you see going through there? Does AT&T have easements on that or leases on that or how does that work?

Hugh: Well, it's a variation. If you think back years ago when we had hard line phones, AT&T had all these hard line easements across the United States, so they had to connect everybody. And so that's kind of transitioned over to fiber optics. Now it's leading up to the wireless tower sites, et cetera. They had all that through either easements or ground leases. And then they owned a lot of property as well, but it was amazing how much real estate they had on their portfolio at that time.

Seth: Wow. So the property that they own, is that just like for their office buildings or their towers or something, you're like, why would they need to own versus lease property? Or is it just whichever they can get to get the job done?

Hugh: Well, it was a transition. They made a little bit of a mistake years ago of owning a lot of small pieces of property and that became an issue when those properties became obsolete for the use. They owned a lot of buildings across the United States, again, years ago because of call centers and just administrative et cetera. They're across the United States, so there's a lot of properties they own that's transitioned. They've kind of got out of that a little bit to more leasing than owning because of the cost of ownership.

Seth: Okay. So in your role now, sounds like you work directly with individual property owners to try to find new opportunities to lease out land for a cell phone tower or to try to take existing leases and make them better or all the above or…?

Hugh: I would say there are four main components. We get contacted by literally 2,000 to 3,000 people a month looking to put something on their property and we try to assist them to, I'll say, increase the odds somewhat. There's no way we can go out to AT&T, Verizon, and T-Mobile and say, “Hey, this property's here. You need to put something on it.” There's just no, that doesn't happen.

The other situation we work with, if somebody's been presented a new lease, let's say AT&T or Verizon comes to you and says, “Look, we wanna lease your land, we wanna put a cell tower on your property, we wanna put equipment on your building rooftop. We assist in the valuation of that site negotiation and structuring of that agreement from start to finish.” If they have an existing cell tower on their property, we assist them with regards to understanding how to increase value on that by—and we could probably get this a little later—understanding the value of that one site.

And our average increase over the last several years has been 300-plus percent immediate increase in revenue these property owners have been able to get. Because, again, looking at it a little bit differently, a different way, is the way property owners are sometimes contacted to sell those revenues. So they're getting a monthly revenue. And that's an opportunity we help with in the structuring of that agreement and valuation of that agreement.

And then sometimes, kind of related to that, is certain groups come to us and say, “Hey, we wanna start buying these leases because they see them as great passive revenue sources and great investments for the long term.” Yeah.

Seth: Part of the reason why you know, when you reached out to me, your background intrigued me is because I know, as land investors and commercial real estate investors out there, there is an opportunity from time to time to lease out a portion of the property to get lease revenue from a phone company like this or just some kinda lease revenue from a cell phone tower.

And it sounds like from what you're saying, so if I have a property and I, there isn't currently one of those on it, but I want to get one on it, that doesn't really happen that often, right? It's more, you know, if the need is there, the cell phone company will contact the property owner. Is that how it works, or is there a way to make that happen if it doesn't already exist?

Hugh: Well, there's a slight way and as I mentioned earlier, there's a way to increase the odds seeing it like going to Las Vegas and you're trying to better the odds and you're trying to make that margin just a little bit closer toward you. The best way to do that is for a cell tower company, the biggest issue they usually have is speed to market and they need to find a property.

So the best way you can kind of get a little bit closer to having a chance to get something on your land or your building is to get your information out to those companies looking and understand who to get those out to. So if they're looking in an area, let's say they're looking in Austin, Texas, for example, and if they already have information about one, the property's available, two who owns the property, three, just general information of how to contact that person, that gets you so far ahead of the game right there.

Because, let's say again Verizon is looking for something in that area, well they gotta find out first is if their property available, two, if the person's interested, and three, how to contact them. If you just get those three things to that company, that gets you again a little bit further down the road.

But again, there's no way to contact Verizon or AT&T or either tower company to say, “Hey, put something here because it's available.” But one thing really quick, we're seeing more growth in the build-out of sell sites than we've ever seen. And that's just based upon 5G technology because 5G works upon densification and you have to build more and more cell sites.

So if you compare to last year, the year before, the year before, year before, there are more cell sites being built. As a result, more properties are needed for those cell sites. And as existing cell sites are more valuable than they ever have been because of the need for those cell sites to build up the network, particularly 5G.

Seth: Yeah. So a couple questions came up as you're talking there. So I guess first of all, in terms of letting the cell phone company know this property's available, here's how to get ahold of me, this kind of thing. Is this kind of thing where like you just find out who they're and tell 'em once, or do you need to remind them every six months? “Hey, just so you know, this is free.”

Because I know, like in household sailing and looking for storage facilities, that's a common thing where we'll send direct mail again and again and again to one owner just to make sure we're still interested. Is that how this works or no, like they just have a database and they put you in there and that's all I have to do?

Hugh: Well, I'd say a couple of things. You need to get it. First of all, you need to go to the company, but you need to get over the right people in that company. Number one.

The second is, yes, you need to think of it like a bunch of paper on your desk. You need to move that paper back up to the top every so often. And not to advertise, but we provide a service that sends that out to almost 50 companies and we repeat the process every three to six months. So the people who sign up for that service, they're getting that sent out to those companies. And again, also getting it kind of moved up to the top of the stack as, as much as we can. Now, again, there's no guarantee they'll get something on their property. We're just trying to increase those odds just a little bit for 'em.

Seth: Yeah. So like if somebody comes to you with a property where this is what they want, like what are some examples of property types that are ideal for this? Like the zoning, the size, location features and characteristics. Like at what point would you look at one of these properties and just be like, no, don't even bother, this is never gonna happen versus yeah, this should happen. Like we gotta work on this. How do you make that decision and understand that?

Hugh: Well, I would tell you that the biggest issue is, and what's happening in the industry over the last several years, is because the growth of using cell phones for a lot of different ways, residential areas, you can't, you have it own a residential property, or if you own a multi-family property, that's kind of difficult because the nature of the zoning there, the best properties again, have kind of mixed-use zoning.

And the best properties out there, I'll tell you, are churches, schools, municipal areas, and self-storage. Self-storage has some of the highest rates of having cell towers on them because of how self-storage facilities are de are determined. You go build a self-storage in a commercial area, but it's near residential, right? Because you need people to come drop off their stuff to store in the facility. And those are in that little zone there that are best.

So if you're looking at a best property, you ask me where are the best properties? You're gonna look at a commercial area that is near residential areas because that's kind of that oasis zone. That's the same thing with churches. If churches are usually in the middle of a community, right? A school in the middle of a community, the same thing with certain commercial properties. So if you understand, and this is one of the ways you need to understand how to negotiate these deals out, you need to understand the value of that one site and understand where their restrictions are of the cell tower companies restrictions are.

But in general, if you have a property that's commercial but near residential that has a higher value than others. Now you can also look at certain situations where you have an agricultural piece of land that you may think, hey, this is out in the rural area. However, because of certain restrictions, because of how the network is laid out, it again has high value because of the nature of where they need to put the site.

Just think of it this way, every one of these sites has an individual value. Every one of these sites has a utility to the company leasing it. So you have to kind of deep dig into these things to understand what the value is. It's not based upon market comparisons or what somebody got in the road, et cetera. It's based upon that one valuation standpoint of that one particular site.

That's how, and I'll tell you why I'm a hundred percent correct on that, if you go in any city in the United States and you go to AT&T, Verizon, T-Mobile, AT&T has so many sites in a certain zip code, just a zip code, and you say to them, “Do all those sites have the same value to you?” They would say no because they all have their own individual value. So a property owner shouldn't look at it as a way of saying, “Hey, I'm going to judge the value, just because you’re in a certain geographic area.” You have to look at 'em individually.

Seth: Okay. Now on that whole 5G thing, so I'm definitely not an expert in this, but I have heard that these 5G towers or whatever you want to call 'em, are they smaller? Like can they just go on a telephone phone pole instead of having its own dedicated, you know, conventional tower? Like, like when I think what of these cell phone towers, I'm thinking of something that's like, I don't know, five stories tall, this huge thing. Is that what we're talking about here? Or is there something different that we have in mind?

Hugh: It's a mixture of both. Think of it like a a bicycle wheel. Okay, you have a hub and you have the spokes, right? So if you have a macro site, which is a traditional cell tower, somebody's driving down the road, they see this huge cell tower that's a macro site, let's just say for discussion purposes, all the smaller ones that you see sometimes as light poles, et cetera, those are smaller 5G sites that have to be very close to each other. So there's a combination of both.

So what's happening is you're having a build out of those smaller sites in Conde Junction with larger sites being built out as well. So just to give you an example, right now in the United States there's approximately about 500,000 cell sites. Okay? By 2030 some estimates you only need another million on top. That means double of what you already have.

So what does that translate to a property owner? There's a lot more opportunity out there, whether you be an individual, a corporation, or a municipal organization, you're going to have to have these sites available because the only way this works, all the cell towers, all the cell sites, they're the backbone of all the information technology we have on our phone. And if we can't have that backbone, it's like having the fastest Ferrari, Lamborghini, et cetera, and there's no road, right? It doesn't do you much good. And so you have to build out that. So those small sites are gonna be built, but they're gonna be a whole bunch of large macro sites being built because they have to be the central hub point.

Seth: And you may have already said this, but I guess just to confirm, so if we're talking about a residential property, like just a single-family house, like this doesn't work there, is that accurate or, is there any condition at which you could do that?

Hugh: Sure. A single-family residential house. I will say it can happen. It's very limited at best. It depends on the area, et cetera. We, we deal with sites like we're dealing a few sites right now in California and Florida that are exceptions to it. They're kind of in a rural area except for one up in Napa, California is right in the vineyards, but that's a different story. But those are the exception; multi-family, like an apartment building, that's a possibility on the rooftop or in there. But a typical residential home, highly unlikely.

Seth: Okay. Do you think the day is coming where people won't have wireless routers in their houses anymore, they can just hook up to the local 5G and like that's it, that's what they need for internet? Or is that a long, long ways off?

Hugh: No, it's literally right around the corner. I mean, you're going to, you just think you're being unplugged. This is all being unplugged where you don't, not into a, a typical hard line in the ground, what's called fixed wireless access, FWA. It's just basically what you're doing is when they build out 5G, you will not have a typical hard line at your house. You'll be working off, at your home or office, even in a commercial setting, you'll be working off of a wireless connection that's not based upon a router, it's based upon that 5G network that you have in that area.

So that, that day is somewhat already here. Fixed wireless access is already available. It's just growing and that's why there's such a build out as we're talking about use of property. That's why they have to build out all these sites because to have that inhabited, that speed, you have to have that densification. So it's, it's here, it's gonna be a lot more here in the very near future. I'm not talking 10 years from now, I'm talking two, three years from now. We're gonna see a total change in how everything is, how everything is set up from a commercial and a a home application.

Seth: What do you know about Starlink, or what are your thoughts about that? I don't know hardly anything about it. Just other than what I hear on the street, which is not that credible. But you know, the idea being there's satellite up in space that can give you internet anywhere in the world. I don't know if that can control phones as well, but I don't know, is that the future or is 5G the future?

Hugh: I think Starlink is one of the biggest, I think the biggest achievements that we're gonna see in the next five to 10 years. I think Starlink and their competitors, because Amazon, Jeff Bezos and has his own company, Bill Gates has a company out there.

So what basically Starlink is, is this low-orbit satellite telecommunications and you're connecting not to a cell tower, you're connected to a satellite. You can have that for internet service at your home, but also the transition is going to be, you're connecting to that via your phone and where that is right now. And so the advantage of T-mobile is it has an agreement with Starlink to start next year. How that's advantageous? If you think about it, if you're out in a remote area and you don't have a signal, well think of the old movies or the movies still today. You have the SAT phone, the satellite phone, and you're in the middle of the desert and you have that SAT phone and they're calling each other.

That gives you the availability to not only make a phone call but text. And if you're lost in an area you don't have a service, that's great. Also, you know, if you've ever been in a bad weather situation where you had a hurricane or a tornado where the cell towers go down, it provides that backup service eventually that will start to speed up and you will have a situation by which we are using low-orbit satellites just solely as well.

Now that's a ways away, but it is a transition and there is, as I just mentioned, some of the players in it, who're spending billions upon billions of dollars. That is the next step in the telecom industry where there's an alliance upon that more than there's today. But you'll be hearing a lot more about Starlink and their competitors because that's really something that…

Think of it, just think of it from this example. If you asked me 10 years ago or five years ago, Tesla and you said, you know, where is Tesla there versus you know, EV cars where they are now and how much more integration, just think about how we're transitioning. Same thing, it's just gonna be a transition at some point. So I don't think we'll ever get off the cell tower situation, but it's gonna be a transition.

Seth: Yeah, I know, I mean it's a different thing, but when I think about, like the artificial intelligence space and how much has happened over the past six months, like just there, I mean, it's the kind of thing where I… I hear people predicting, yeah, imagine five years from now when this will be possible. But then that thing they say is possible, like literally the week later, like it's happening that quick where it's just like, whoa, this is unbelievable.

Hugh: Oh, one quick thing about artificial intelligence. The big thing with artificial intelligence, which is tied into all this is artificial intelligence is incredible how quickly it's integrating into our world. But all this, and again, I go back to the backbone of what we've talked about of cell towers, okay? All this with regards to scalability. For artificial intelligence to get global and have scalability, it has to go wireless, it has to go over your phone. Think about if you can only use Twitter, Facebook, et cetera on your laptop computer or your home computer, you couldn't use it on your phone. Think about the scalability of users. That would be how limited that would be. You're going to see once that transitions and once the 5G and Starlink and all these other things get the capability to tr transmit and have that capacity, it's just like lighting a match to gasoline, it will just explode.

Seth: Just makes you wonder what is the future of having like the tower infrastructure all over the place if it's gonna be beaming down from satellites. I dunno how long these leases typically are for a cellphone towers, is it like ten, twenty, fifty years. Like how long do they last?

Hugh: Sure. Well, to answer your first question, I think, the satellites are going to be an add-on, not a replacement. Anytime in the foreseeable future. I'm talking 20, 30, 40 years. I think they're a great add-on.

With regards to lease terms, that's a great question. A typical lease is somewhere between 20, 30 years up to sometimes 50, 60 years in length. That is both a benefit and a negative because you need to understand that time is a commodity with these agreements. And if you understand how to negotiate these agreements out correctly, you understand how to give the right amount of time to secure the lease, but also not give up too much time so you don't have reentry points to renegotiate the lease.

But they're great passive income sources long term, month after month, year after year. And if you negotiate them correctly and structure them correctly, you're gonna see not only recurring revenue, you're gonna see tremendous upside because as the value of those sites become more, you'll get pulled up as well if you structure them correctly. Now the cell tower companies aren't gonna give you that. They're gonna make you work for it, but you could do it.

Seth: Yeah. I mean how much money does a typical cell tower lease make? And I know that's a super open-ended question, but like what determines this value where the price you can charge for it?

Hugh: Well, it kind of goes back to understanding where most people when they're presented a sale tower lease. So if I came out to you today and you had a property and you presented a sale tower lease, you would see an amount typically depending on a rural area versus an urban area, depending on where you are, somewhere between $700, $800 a month to maybe a couple thousand dollars a month. Okay, with an escalator, let's say two per 3% and let's just use a 30-year term.

The worst thing you can do from that perspective is look at, again, looking at what other people have been paid. You have to understand the value of that one site. Also all AT&T, Verizon, T-Mobile or any cell power company wants you to do is this just this very basic thing. This all they're trying to get you to do financially agree to that rent, agree to that escalator, agree to that term.

Why? Because if I get you to agree to a 30-year lease, a $2,000 a month, and a 3% escalator, I have fixed my cost over that period of time. And no matter how much value I get as a cell tower company, I don't have to pay you anymore because I've fixed my cost.

Now just think of it this way, use this example for years. If I came out to you today, you had a piece of land, let's say it's in the rural area and I said to you, “I'm not from a cell tower company but I'm from Exxon and I wanna put a drill out here and I'm gonna use that area of your property and I'm gonna pay you $5,000 a month, and I'll increase it every year by 3%.” Your first question I bet would be how much oil you're gonna be getting, right?

You wanna be paid not only based upon how much space they're using, but how much value they're deriving. But if you look at it as a utility, okay, so just if you close your eyes and you look at a cell tower and you look at an oil rig, they're very much the same. One is pulling value from the ground, one is pulling value from the sky. And the worst mistake property owners make is they think small, they think about rent and they don't think about structure.

If they understand that they need to be paid not only based upon the space being used but the value being derived, you can have leases that are worth over the value of the lease, a couple million dollars to $10 million, $15 million over the life of those leases. And if you go to sell leases as well, that's understanding value and structure and not looking at it about what other people are getting paid because of, because after the last 20, 30 years, the cell power companies have had the advantage of getting really good deals.

So if you look at those deals they've already gotten, you're perpetuating the bad deals. Property owners contact us all the time and they're not contacting us that have existing leases, as you say, they're not contacting us because they're happy, they're contacted because they understand they got kind of railroaded a little bit and they're undervalued. And the reason isn't just because they agreed to a lower rent they should have. The reason is they didn't properly structure that lease.

I mean, I can't tell you how much value is out there. The average lease is undervalued between $1 million to $1.5 million. Just think about that. You have something that you have on your property that you've just undervalued just because you didn't understand how to structure correctly.

Seth: Yeah. So if somebody already has an existing lease in place, is there any way to like go back to the negotiation table or is that, has that ship sailed?

Hugh: Yes, you do. You have it. We've been in business for 12 years and we've gone back with leases for 15, 20 years plus.

Because here's the thing. As I mentioned at the start of the show, I was an attorney inside AT&T for a very long time. When you're trying to draft an agreement, if you're on the cell tower side, you're trying to draft an agreement that there's going to be for 20, 30, 40 years. You can't throw a blanket over everything. There are things that are gonna pop up that you don't, don't have under that agreement. And if you understand what they need and what they're lacking, that being the cell tower company, you can go in if you understand the value of the site, you can go in, you always have an opportunity to either go in right now or have a strategy to go in when they contact you.

But yes, definitely yes. It's one of the most misunderstood parts of a cell tower agreement. People say, “Well, I have 15 years left in the agreement, there's no way I can renegotiate.” Definitely not. There's always a way to get back in it if you understand what you're looking for.

Seth: Yeah, I know you're an attorney. A lot of times when I think about calling attorneys, I'm just, just knowing that it's gonna be really expensive to do that. It's like “Uh oh, I shouldn't even call 'cause it's gonna start costing me money.”

Do you have some kind of a free consultation where it's like, “Yeah, we'll take a look at it if it's not gonna work, we'll tell you that we can go our separate ways, but if it is, we'll let you know.” And how do you handle that kind of pricing?

Hugh: Sure. So I always tell people we have a… every day we give out more free advice than we get paid for.

We have a program, we've had it for the last 12 years. We give a free review of every lease out there, either if you've been presented a new lease or if you've been, if you have an existing cell tower lease on your property. We sit down with people on the phone, discuss what their options are, and then we have different options with regards to how we charge our clients. Either an hourly option, a contingency option, or somewhere in between. And so definitely if somebody has a lease or been present one, we'll sit down with them and discuss it.

And sometimes, you know, the best advice, and, and this is the toughest thing to tell people, is to do nothing. Sometimes they're trying to do something, they're so focused on somebody who's offering them something and, and they're about to get into a bad deal. We'll be very bluntly honest. I am a bluntly honest person with them and say, “Here, this is what you should do.” Because, again, there are always opportunities, but there are always issues they need to understand as well.

But to answer your question more directly, yes, we, we talked to people and, and discuss their situation and if they'd like to use us for our services, then we present them a proposal for those services.

Seth: Yeah. And just to confirm in case anybody listening to this isn't putting this together, so having one of these leases on your property literally makes your property worth more, correct?

Hugh: If it's structured correctly. A tremendous amount more. If you can structure the lease correctly, it is one of the best real estate assets out there. Why? What I mean by that is you have an agreement that is totally passive. The cell tower company is paying you monthly, every month. if you structure correctly, you have no expenses with regard to taxes, utilities, maintenance, et cetera for the area they're leasing. Zero. You're not having to do anything with that property.

In addition, if you structure correctly, you're basically being pulled by a rocket. What do I mean by that is the telecom industry. Think about it. Besides air, water and food, what do you rely upon more every day than your cell phone or wireless communication? Every day, it is growing at an exponential pace.

You're in an area, an industry that has continued to grow. It can continue to get more and more value and, but we're becoming more and more dependent upon it and you're owning infrastructure. It is one of the best assets to own it. What would you rather own? A car or the bridge? That bridge is more important than the car.

So my point being is it is a great value, again, with the caveat that it's structured correctly. There are some negatives to it, which I'm sure we'll get into, but it definitely increases value if you do it correctly.

Seth: Well, on that point, so who pays for this cell phone tower infrastructure? Like I assume the phone company does, right? So do they own the thing?

Hugh: Sure. So just a quick, kind of, breakdown of it. If a cell tower company comes to you, what they're doing is they're asking for the use of a particular area in your property, let's say a couple of thousand square feet. They are going to enter into a lease with you to lease that property for 20, 30 plus years. They are building out the infrastructure of the actual tower. They're building all the access roads, they're building all the utility conduit, et cetera. None of that expense comes back onto the property owner.

In addition, if the property owner's taxes go up, based upon that tower being there, that should be passed back directly to the sell tower company. If there are utilities that are paid directly from the utility company, if there's maintaining that road or that area they're leasing, that is paid directly by the cell tower company.

That's why I say it’s truly passive income if you understand to make sure you get those, those things done correctly. So all that money that capital goes into it is from the cell tower company. All the expenses that go into it are passed back through, are paid directly by the cell tower company. So as long as you get that structure correctly, I always say you're cashing checks, that's all you're doing. And those checks can get bigger and bigger if you understand how to capitalize on the upside potential of that cell tower as well.

Seth: So it sounds like this is an absolute net lease, right? Where basically, the tenant pays for literally everything.

Hugh: Yes. This is why we have a couple thousand people, at least per month, contacting us about getting a cell tower on their property because they understand the value of it, they understand that if it's on their land, their raw land, or on a rooftop et cetera, commercial space or agricultural space, it is a revenue generator. It is a passive income generator. Cash flows, cash flows, cash flows. It's, again, not easy to get one, but if you can get one and do it correctly, it is a payoff for the property owner.

Seth: Is there some kind of a way to see a map of your area maybe indicating, “Hey, there's a cell tower here in there and there,” just kinda understand like, where's my property, is there anything near it? What's the kind of potential like should I be investigating this or not? Is there a way to do that?

Hugh: Sure, there are a couple ways and we have a huge database. We can see 90-plus percent of all the properties out there with regards to cell towers actually on those sites. But as a property owner, if you wanna do this, I would say there are two ways, easy ways. There's a nice app called OpenSignal and you can download that, look at it, put it in your address, and you see the cell towers around you. It provides you some information where everything is laid out. That's just a quick and easy, it's kind of the beginner-level kind of situation, but you can kind of see where everything is.

The other thing we're located based in Nashville, Tennessee, the state of Tennessee and other states, they have records for assessments on real estate and if the cell tower is on a piece of real estate, the assessor marks it and designates where that property is and and the cell tower being there, you can go to your local assessor's website or office, pull that list, provide the addresses, provide the owner information. And there you have it. Now, not every state has that, but you need to check your state and they may have it. For Tennessee, I'll let everybody know, in Tennessee, you can just go online, it's there.

Seth: Awesome. Going back to this question of what determines the value of one of these leases? So how do you figure that out? Is there a way to see how many cell phone calls are going through the air in a certain area to understand, okay, that's what the demand is for this, so it's worth this? Like is that how you do it, or how do you determine that?

Hugh: That's a great question. The quick way of explaining that is two simple things. It's value derived and detriment avoid it.

And what I mean by that is if you have an existing lease or been presented a new lease, if you can understand and that's where you, you have to hire somebody to us to understand this to a great degree. But if you understand why that site is going to be built or why that site is already there, the value being derived, you can have a site in the middle of a rural area, a desolate area and people say, well that's, that has a lower worth. But if they only have that one option and that is key for that network in that area, the value goes up. You could have a site in the middle of here again, I'm in Nashville, in the middle of Nashville, that has a lower value because they have more options.

Also, if they don't have the ability to build that out for their network, remember they make money based upon serving their customers and the customers pay them. And if you understand what their detriment would be if they couldn't get that site on your property, if they come to you for a new lease, or if they couldn't continue that site at your existing cell tower location, then you can understand how to get the value correctly.

But once you get that value, if I said to you today, “Hey T-Mobile's come to you, they wanna put a tower on your property.” And I said to you, “You know, we think the starting rent should be $1,875 a month.” Great, you know what it's good for, that's good for today only if you don't structure correctly and get paid based upon the value they're getting over time.

So think about changing from 4G to 5G. When they're doing that, any cell power company or more particularly any wireless carrier, it's upgrading. So they can do two things.

One, they can continue to serve their existing customers so those existing customers don't go to another carrier. Okay? Think about it. If you had AT&T and they only had 4G coverage and Verizon had 5G coverage, eventually you would swap over, right? Because you want the better service. So that's number one. So you wanna retain existing customers.

And the second thing is you want to have the ability to add more services on your subscription that you're currently getting from those customers so you can make more money. So understanding the different layers of this can help a property or 90 to get there, right on day one.

But to structure the lease. So every time they add value, think about this, every time that a cell tower company adds value, you want to get some of that additional value filtering down to you. That's just like my example of the oil example. If I'm sitting there and I tell you I'm gonna get a thousand barrels of oil from your property every month and then I'm able to change that to 2,000 barrels of oil, I, as a property owner, I wanna be paid on the 2,000 barrels, not the 1000 barrels. So understand this is all about utility and structure.

Seth: In terms of how these leases are structured. I know earlier we were talking about the future in Starlink and what that's gonna look like and who knows, but let's say I create a 50-year lease with some cell phone company today, and 10 years from now, it turns out we don't need cellphone towers anymore. They're gone.

I dunno if that'll happen, but who knows since that 50-year lease is in place and you know, set amount of money and all this stuff, does that company have to keep paying me that lease payment even though they've shut the thing down and don't need it anymore or? How does that work?

Hugh: Well, I'll give you two answers. One, usually they would not because they would just terminate their lease and walk away. They would take down their equipment, bring the property back to the original condition, et cetera. I don't believe that's gonna happen anytime in the near future mass exodus from cell towers. So usually would not.

Secondly, just again, a self-promotion, if you hired us, we would not because we asked for under grievance. So if something happens, they'll continue to pay you, so we can’t just walk away whenever. So there's a little bit of a caveat.

The 90-plus percent of people out there that have cell tower leases, basically they have month-to-month agreements. We try to get our clients long-term guaranteed agreements that helps them two ways they guarantee that payment. But think of it this way, if I came to you for a valuation of a property, let's say whatever your property may be, and I said I have a lease here that has a 15-year guarantee of revenue, and I'm getting $2,000 a month versus I have a lease here that can be canceled at any time, that getting $2,000 a month, which is a more valuable asset for that property.

So it's all about structuring, I keep on saying that, but the one thing, one of the key words to talk to people about is structure, structure, structure. The reason being is a cell tower company, a wireless carrier, when they present anything to a property owner, I don't care if for one of the biggest companies in the world or an individual property owner, they try to get them to think very small. We try to get our property owners to think bigger because that structure and thinking bigger will pay off over the long term.

And that's why we're in business 12 years later. We have proven the model over and over as a situation by which we are trying to change the way people think because the cell tower companies and wireless carriers try to get them to think very small, and when they do that, the property owner misses out in a lot of opportunity and a lot of value.

Seth: Yeah. So do these cell phone companies hate you because of… are you costing them more money?

Hugh: Ah, hate such a nasty word. I would say that they do not like us and more particularly me because we we're very honest with people and we're very honest with them and we hold them. That being the cell tower companies of wire carriers, we just tell them straightforwardly how it needs to be done.

And we know… look, the great thing about the cell tower industry and the bad thing about the cell tower industry is the exact same thing. It's been done the same way for the last 20, 30 years. So I know the playbook, it's like lining up in football and you know what the play's gonna be already. I know what their next play's gonna be and if you understand that they hate that because the big thing in the industry is they don't want anybody to know what's behind the curtain? “Hold on. You don't need to know that. You know, we don't wanna tell you how much value the site is actually giving to us. We don't wanna tell you how bad it would be if we couldn't have the site.” If you know that and you understand what their next move is or could possibly be? Yes, they do not like it.

Seth: Yeah, I gotta think almost nobody understands how that works behind the scenes, right? I mean, it's such a specialized thing, I don't know how they would know it if they weren't working with you, right?

Hugh: Yeah, it is, it is a huge industry with a niche kind of group of people who understand it. Sometimes we have people contact us and say, well I, you know, had my local attorney do this or had this and I say, “Well that's great!” They're probably a whole lot smarter than I am, but they're not smarter than us about this one thing. This is what we do over and over. It's like, like going to a doctor and to a dentist and you're about to have heart surgery. It, you know, the dentist is a doctor but he doesn't do this every day. He doesn't perform heart surgery, and it really is that specialized.

And that, again, is what the cell power companies rely upon. They understand they're trying to do two basic things when approaching a property owner. They're trying to take things from that property owner and they don't realize they're being taken and they're trying to give things to the property owner and they're really not what they seem to be simple as that. I mean, this is not rocket science. If you understand those key components, you can do it over and over. But you have to understand those and understand, again, in particular detail.

Seth: Well, I know, as real estate investors, something that a lot of us are specialists in because we have to be in order to find great real estate deals is understanding where and how to find lists of very specific types of properties and property owners properties with certain characteristics and locations and values and all this stuff.

So if my goal was to find a property with a cell phone tower and to buy that source of income, can you think of anything that we would need to search for to narrow down those specific types of properties? Or is there no way to do that? I don't know if there's any database out there that lists, here's where all the cell phone towers are and these properties. I mean, obviously, it's gotta be something like commercial, that kind of thing, maybe multi-family. But are there any other characteristics to look for?

Hugh: Well, I don't think it's so much characteristics. It is kinda like what we go back to earlier if you want today, and you said, look, I wanna go try to buy 10 cell tower lease agreements. Okay, for the revenue, I would say easily go online. There are different, different applications that you can go.

Let's say again, I'm here in Nashville, I can go in Nashville and I can pick, I can see where all the cell towers are, right? I can see the addresses of those locations. I just look up in my local county assessor's office who owns it, right? Simple as that. That's step one. Some counties, some states even have roles of all the cell towers that are being assessed, the real property owners being assessed, and here's your list, here are all the locations, here's the information to that property owner. You just reach out to them.

The other way, very simply, when you drive home today, you'll see cell towers everywhere and you just locate the site and you write down the address and, and there, there you go. And that's the old-school, quick way. And you go up and either knock on the door or you write down the address and find who lives there and contact them.

Seth: Is there a way to buy just the lease from them instead of buying the whole property? Is that something people do?

Hugh: Yes. Okay. Yes, definitely. It's a huge industry out there. Property owners are contacted all the time and it is a great industry if you understand how to value the lease correctly. As I said, it's a passive income source with continued growth. So you can go out in one of the growing industries out there, we get contacted all the time by people saying, look, I want to go and invest in buying these leases. Think of it like buying an annuity to some degree, and they're going out and buying the cash flows.

So again, that's kind of what we're just talking about is that you can, if you find a list of property owners, you contact them and say, look, I'm willing to buy this at a certain price based upon future revenues. Now the tricky part of that is, again, to understand the value of that site because every dollar isn't the same based upon the value of the lease, who's on the tower, et cetera.

But it is a huge growing industry, and I can tell you over the last five years how many more people are getting into it because of the uptick in value of these things. And in addition to that, what we see all the time is just, I think in the last couple weeks, we saw two or three examples where a property owner's gone in, bought a property, the overall property, but they've bought the lease with it of course. And they've gone in and resold the lease for three or four times the value of what they paid for because they understand the value of the lease.

And so, if you buy the property, understand the value of the lease, but you can go buy the lease separately if you want to.

Seth: Maybe at one angle a person could take is try to go and seek out these leases, buy them, then work with you to make them worth more, maybe increase the payment or something, make it more valuable and then sell it. Or maybe just buy it cheaper and then hang on to it. Does that sound like a thing somebody could do?

Hugh: Yeah, either way, I mean, it's a great source of revenue. We can uptick it. That's one of the things we go in and increase value immediately.

But the other thing here is if you think about, think it from this perspective. If I go buy something and I'm getting a cash flow of, let's say $30,000 a year, and I have a 3% escalator, and I have an asset based upon that, I would tell you just quickly that asset would be somewhere in the $600,000 to $700,000 range. Okay? If you just bought it, it's $3,000 a year, just kind of a bland, I'm getting, let's say $600,000 valuation. I got a 3% escalator, it's increasing in value by 3% every year I'm getting paid a dividend, my rent is at $30,000, which is increasing as well. You just think about it, and it's no cost to me, zero, I have nothing.

If you go buy an apartment building, you go buy a piece of land, you go buy anything that is not true passive income because you have time involved in it, you have maintenance, you have everything associated, you have landlord issues, et cetera. This is not, this is why people are out there scouring to get these things out there. It's becoming a bigger industry because of two things. People are learning about it, but more and more cell towers are getting built. The ones that are out there are getting more valuable because of the dependency upon them, and there's more opportunity as well.

Seth: Interesting. Buying cell phone tower leases, it almost kinda reminds me of buying a note or something like a source of income that's gonna go in the future and you're just basically cashing that person out. Now is that like, why would a person sell a lease like this? Just ‘cause they want more money now?

Hugh: Yes, there are three reasons people sell their leases.

One, they need the money, of course.

Two, they have a better use. They think they can take that and move it towards something else and whatever. And that can be just taking the money, reinvesting somewhere. We see a lot of property owners do it and say capital investment in their existing property, they're gonna redevelop property, et cetera, and it's quick money to get that.

And the third is a hedge. You're hedging against that long-term viability of the site. And again, depending on the site, that's either a good move or a bad move, usually it's not the best move. But again, you have the ability to go buy these things if you want to and if you understand what you're looking at, you can make a good amount of money off of them.

Seth: Yeah. So when you mentioned this website or whatever it is in Tennessee or Nashville where you can find all these locations and addresses of all the cell phone properties. So if I wanted to see if I could find something like that in my state or just any state out there, what would a person do a Google search for to try to see if that's available? Like any keyword words come to mind in terms of how you would find that?

Hugh: I would suggest three things. One, first I would look at your local property assessors, county or state local property assessors. And then just there should be some designation with regard to cell towers. Like in the state of Tennessee, there is.

Secondly, pick up the phone, call the state assessor or the local assessor in your county and say, look, do you guys have a list, or you designate on your website, or otherwise where the cell towers are assessed, and they're getting, there's more and more of them being assessed every year because the counties and states are understanding there's revenue available for them to assess these properties with that on there and for the cell tower companies.

The third is, as I mentioned before, there's a great app called OpenSignal and you can go in there, put in your address, it'll show you all the cell sites around you. You click on it, you find the address, you go on the assessor's office, et cetera.

There are some other ways you can do this, or as I mentioned before, you just drive down the street and you, you find one, you say, Hey, that's, hey, I can write down some addresses. I mean, they're everywhere. The funny thing we always run into is people say, I didn't really know cell towers until I got approached for a cell tower, or I heard about this and then they start looking everywhere and they're, they're all over their town or their city, so there's a lot of opportunity out, but the assessor's office is kind of the back channel way to do it. And once you have that list, it is just all you gotta do is, you know, start contacting those people. And this, you can do that direct mail, you can do that via phone, emails, et cetera, if you can get the information.

Seth: Yeah, I just did a Google search right now for my county where I live, Kent County cell phone tower map locations. I think it was the second result that showed me FCC-registered antenna towers in Grand Rapids, Michigan. And there are literal coordinates for every single one that there is. So it's not that hard, apparently. Just gotta try a little bit and you'll find them.

Hugh: No, it's not. It's, it is growing and so people understand when we promote it to understand people for real estate investors, especially the valuation of these and also the opportunity as well. Yeah.

Seth: Out of curiosity, so how do you make your money? Do I need to write you a check, or do you take a portion of the lease revenue in the future? Or what's in it for you to do all this?

Hugh: Well, we make our money. We work very hard, we're very good at what we do, but we either work on a strictly hourly basis depending on the situation, or we work on a basis by which if we're able to add a dollar for you, we get a percentage of that dollar, or we work on a one-time fee basis as well.

So, as I said, we have a wide variety of clienteles. So we have one, we do work from one of the largest retailers in North America. We have some of the largest self-storage companies, et cetera. So their deals are different from an individual. So, we always sit down with property owners, and just like I say that, we try to tell property owners, you need to look at each situation individually for the valuation. We look at it as well, and then we come up with a proposal for them. You know, I would say if I had to come out and paint your office building I'd wanna look at it first, right. And I'll give you a quote based upon the situation.

But we have a wide variety, and as I mentioned a few times here, we've been doing this for 12 years, almost 13. My advice to anybody, we're not the right fit for everybody. I am, as again, brutally honest with everybody, we're not the right fit for everybody. And hopefully, we are, you know, everybody would come to us, we want to help them, but even if we're not the right fit for you, get someone to assist you with this. The one thing that the cell tower companies rely upon is the belief of property owners, that they don’t understand how to do these things.

And I can tell you that from being on the other side for over a decade, and some of the smartest people on the other side of the table when I was negotiating deals for AT&T were so much smarter than I was, but they, they didn't understand how to structure these agreements. And my company at that time, AT&T, benefited greatly from it.

Seth: The reason I ask that is just that I'm trying to think through the rationale why somebody wouldn't pick up the phone and call you. And in my mind, one of the reasons would be, I don't wanna rack up a huge bill with this company and then they can't actually do anything. Like, I don't wanna get stuck into that situation.

Does that ever happen where it's like you go to work and spend tons of hours on stuff and you're like, oh, sorry, we can't do anything, pay up. Like is that a common scenario, or is there some way that people can feel safe knowing it's gonna be fine if this doesn't go anywhere, I'm not gonna be stuck with a huge bill. How does that work?

Hugh: Sure. So I'll give you, the best answer I can. The vast majority of our clients are, our work is based strictly upon performance. So we don't get paid unless we get benefit for them. And when I say benefit, it's not just benefit financially, it's also non-monetarily of how to protect them as well. That's the vast majority.

Some clients, we're on a hourly basis, but we cap those hours so we don't have a runaway train on this. And we're always very upfront with property owners about that and saying, here's how long it's gonna take to do this, and then how it's gonna progress from there.

So it's a transaction, again, I'm brutally honest, it's a transaction. It always has the possibility of going sideways or falling apart. I can't control that, we can't control that. But we're very upfront about what the situation is, what the possibilities are, what the risks are, what the opportunities are.

And again, the vast majority of our clients and the vast majority of our fees are based upon results, not based upon us working really hard. It's based upon us actually getting a result. My dad used to say effort is great, results are better. And so that's, you know, everybody wants a result, and we're happy to do it, and we'll put our track record against anybody out there on the ability to get results, real results.

Seth: Sure. And I don't know if y'all have any input on this part, but are there any downsides to having a cell tower on your property? Like is it ever a pain or a hassle, or can you think of any negatives? I mean, obviously, there's a huge positive with the revenue from it, but, any reason why a person wouldn't want that?

Hugh: Yes, and there's very, and there's one big glaring reason, that you have to understand how to structure. Again, I go back to the org structure, the lease correctly, the misnomer, the misunderstanding out there when you're leasing space for a cell tower, whether it be on your rooftop or on the raw land, is you're leasing a certain amount of space, right? I'm leasing a thousand square feet, 2,000 square feet, 3,000 square feet. That's correct. But you're also putting restrictions on the rest of your property if you don't understand how it's structured.

So a cell tower company will say, “We're gonna have the right to use this property over here for 30 years.” However, if you don't understand how that lease is structured, they can restrict what you can do on the rest of the property. And how that comes into play, especially for commercial properties or even agricultural properties that get reconverted to commercial down the road, is that that limits future development, that limits future disposition, that limits sometimes future financing of the property.

So you have to understand, they're not just leasing those areas described. They're sometimes putting restrictions. So you have to limit those restrictions. You also think of it this way, I always use this example if there's a cell tower on the property and the typical cell tower lease says, look, I have the right to use this 2,000-square foot area of your property. And let's say you sign the lease goes on for 10 years, and then somebody comes in, offers you 10 times the market value of your property with one condition. They're okay with the cell tower. They just need the cell tower company to reroute the utilities to the cell tower because the way they're gonna develop the property. 95-plus percent of all cell tower leases have no relocation rights for the property owner.

I cannot tell you how many times we've been contacted, especially commercial property owners and say, look, we wanna redevelop, we wanna sell our property. They're asking us to do this. And they haven't put a pathway to deal with those situations. All these leases are is about structuring to get you opportunities and pathways to deal with situations.

Again, going back to what I said previously, people start thinking very small, they think about the rent, you have to think bigger and probably gonna say, well I'm never gonna do this, never gonna happen. They start to think about what's right in front of them and not the possibilities of a long-term agreement.

So the biggest issue and the ways you can devalue your property if you don't do this correctly, is you can give the cell tower company somewhat control of the rest of your property. And that becomes an issue. And it may not be an issue today, it may not be an issue two years from now, but it could be an issue.

And I always tell people, I use the example of my dad and I used to go hiking all the time, but he carried, always carried a compass. And he told me when I was very young, he says, I know where we're going, we've been here a hundred times, but always want to make sure I have a pathway to get out, a map and a compass.

And that's what you have to do on these leases. So that's the biggest issue. That's how you can hurt yourself the most. You also have some liability issues, you need to contain insurance issues, et cetera. But those are fixes. If you understand what you're doing, you can do very well. But controlling your property is the biggest issue that you can run into.

Seth: Yeah, I can totally see that. I mean I'm, thinking of my own self-storage property. I can visualize a spot on it where a cell phone tower could totally go, which is fine for today, but I think to look at 10 or 20 years into the future, what if we wanna make it not a self-storage facility anymore and build like a strip mall there or some kind of a, I don't know, box store or something and that cell phone tower’s in the way.

Are there ways to put lease provisions in there so it's like, “Hey, if that ever happens, we can knock that thing down or relocate it somewhere else on the property on top of the building after it's done,” or something like that?

Hugh: Sure. There are two basic ways of doing that. One is I just mentioning you have relocation rights based upon the ability to relocate them to another portion of your property. The other is a redevelopment, right? So you have a termination, right? At a certain point in time in the lease, if you want to redevelop the property, you basically push that button. You say, I'm gonna give you this much notice. We just need you outta here. And so that again, needs to be understood by the property owner and needs to be negotiated and structured by the property owner.

But, again, 95-plus percent of all sell power leases don't have those two basic rights into those leases. And what happens is the property owner kinda gets stuck thinking about it. You have a situation by a small portion of the property, you're revolving around them, you're subordinate to what they want you to do. That is the biggest downfall, that is the biggest trap door for these leases. And people may say, well, that's not gonna happen. All it has to happen is once, and it becomes a huge issue for you.

Seth: Well, Hugh, I appreciate your time talking to me today. If people wanna find out more about you, give you a call, figure out what's possible, what's the best way to do that?

Hugh: The best way to reach out to us go to our website, which is CellTowerLeaseExperts.com. You can also go to our YouTube channel, which is just Vertical Consultants, and we're happy to give you more information about what we do and answer your questions.

Again, we can provide a free review of any new lease you've been presented, any existing lease. If you have questions about getting something on your property, we're happy to discuss that as well.

Seth: Great. And this is episode 155, so I'm gonna have links to Hugh’s website and a lot of other stuff that we talked about here, at retipster.com/155, and you can check out that stuff there as well.

Hugh, again, thanks for coming out. It's great to talk to you.

Hugh: Thank you. Appreciate the opportunity.

Seth: Hey there, it's me, Seth again, and if you're still listening, I can only assume you enjoyed what you heard on today's episode. And if you liked what you heard, you also might want to know that this May, I'm gonna be meeting up with a bunch of other real estate investors at an in-person event called REWBCON. That's R-E-W-B-C-O-N. It stands for Real Estate Wealth Builders Conference. And this is a conference where we can connect with other real estate investors, get around experts who will show us how they're succeeding in their business, help each other pass roadblocks and struggles and analysis paralysis, and find others who can invest with us in our deals.

REWBCON is happening on May 4th through 6th in Phoenix, Arizona. And I wanna invite you to hang out with me because I'm gonna be there. I'm gonna be a speaker. I'm gonna be given a presentation all about seller financing, the pros and cons of it, who it is for, who it's not for, and how it can really open up a lot of doors and opportunities in your business.

If you decide to go, check it out again, just go to REWBCON, rewbcon.com. And if you enter in the promo code, SETH, you'll get a 10% discount off your ticket price. Be sure to check it out, and I'd love to see you there.