Buying a building with 2 cell towers

by Guy
(West New York, NJ.)

I am interested in buying a residential building that has 2 cell towers. in order for me to calculate the value of the building i have to take all income minus the expenses and then get value by the desired cap rate. My question is do i calculate the income from the tower as a regular income like another unit in the building? What if 5 years from now the cell company removes the tower from my to be building? Please advise.

thank you

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May 22, 2012
Cell Tower Cap Rates
by: Oscar Velez

Hello Guy:

Typically investors and traditional lenders do not value those leases with the same cap rates as the rest of the revenue from the building. The reason is because of the termination language that is contained in the leases. Although there may be steady revenue coming from them there is risk of termination due to mergers and technology changes.

If you are purchasing the property and getting traditional financing your lender and the appraiser may value the leases differently then the current Landlord or yourself.

My company Landmark Dividend Specializes in valuing these assets and purchasing them. I can give you a good idea of how we would value the leases and why we value them this way. If you would like to discuss this further you can contact me at 732-266-7394.

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