Foreclosure Hunt for Cell Tower Leases

Real estate investors buying foreclosures are increasingly finding apartment buildings with existing cell tower leases. Cell tower leases can be a foreclosure buyer’s best friend. However, buying foreclosed properties with a cell site lease is not easy, but deals are out there. Even the savvy real estate investor who buys a lot of foreclosures probably isn’t an expert on telecom leasing, and frankly, even real estate investment experts don’t know how to deal with leasing a cell tower when buying a building mortgage.

A cellular antenna lease will be attached to the cell phone tower on virgin land or a cellular antenna will be installed on the rooftop of a commercial or residential property. If the property is in foreclosure and the bank is not yet the receiver, it will be difficult to get the information unless the Owner/Landlord is cooperative and trusts you enough to allow you to see the lease. There really isn’t a way to identify these types of foreclosed properties. These types of deals are very difficult to find and we recommend that you do not waste your time chasing these rainbows. Focus on the low-hanging fruit: residential apartment buildings and bank-owned commercial properties.

It is much easier to search for REOs with existing cell tenants. If the property is owned by the bank, as trustee you must disclose all existing leases encumbering the premises prior to the sale, and it is in your best interest to provide the details of the lease or, if you are lucky… multi-operator leases.

You need to find out the value of the lease. You want to know the lease start date, which is the date they started paying the Owner after cell site approval. You want to know how much rent they pay each month, and what yearly increases the previous owner agreed to, and how many years are left at the end of the lease. The particular cell operator will also determine the value of the cell tower lease on Wall Street.

How can real estate investors find foreclosed properties that have cell phone carriers as tenants?

This is where you need to get creative. Good foreclosure investors have their guide dogs send them offers. Chances are, they never thought of seeking foreclosures with cell tower site leases. Your best bet is to network with your bank’s foreclosure specialist or REO servicer.

All the major banks have buildings on their books with cell site leases that they are not marketing to investors. They’re simply too busy to assemble a database of foreclosed properties with tenants from existing wireless carriers.

Successful real estate investors looking to find these deals should leverage their existing relationships with banks that do business in the territory in which they operate to identify potential businesses that have existing cellular leases and where the bank acts as a recipient. Ask your banker to scan their REO/Foreclosure database for terms like Verizon Wireless, T-Mobile, Omnipoint, Cellco, Sprint, Nextel, Alltel, Cingular, AT&T, Metro PCS, Crown, Towerco, SBA or American Tower. If you find a foreclosed property or building with a cell tower lease attached, it can significantly sweeten the deal for you because you can take cash out of the cell lease, often in the six figures, and put it toward a mortgage or buying another. building.

It’s also a very good idea to have a cell tower leasing expert review the terms of your lease, which puts 99% of real estate attorneys at risk.

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