• Welcome to AppraisersForum.com, the premier online  community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.

Cell Phone Tower = Leasehold?

Status
Not open for further replies.

Myles Hoffman

Freshman Member
Joined
Nov 1, 2005
Professional Status
Certified Residential Appraiser
State
Illinois
I'm doing an appraisal of residential home on a 5 acre site. The property has a cell phone tower that the home owner is leasing to the cell phone company for $775 a month. The use is legal. I would believe that the lease of the cell phone tower encumberances the property. So would the appraisal be done as leasehold? Or is my logic wrong?
 

Jerry Dell

Sophomore Member
Joined
Jan 28, 2002
Professional Status
Certified General Appraiser
State
Alabama
This is a mix use property. Should be done by a certified General.
 

PropertyEconomics

Elite Member
Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
Is there a separate legal description for the cell tower site? Typically there is and it is spelled out in the document. The lease does not cover the entire property therefore the entire property is not reflected in the lease rate.
Typically the way to appraise these parcels is to value the residential portion of the property and add back in the discounted income stream of the cell tower site over the life of the lease. This would reflect the "leased fee" position in the land and not that of the lease hold .... unless of course you are appraising the cell tower owners interest in the property which would be quite different.
A bit more information would be necessary in order to fully help you with this analysis.
 

stefan olafson

Senior Member
Joined
Apr 2, 2003
Professional Status
Certified General Appraiser
State
North Dakota
You seem to be confused about this situation. You have a five acre site with a residential dwelling, owned in fee simple, probably. That's one problem for you to solve. The other part of the story is a $775/month income stream from a cell tower on the property.

#1. What is the highest and best use of the entire property?

#2. Can you split off one acre and the cell tower and only value 4 acres and the improvements?

#3. You state the use is legal? Is it legal with a residential dwelling present also?

#4. You could treat the cell tower as income off the property by valuing the tower and the leasehold.

#5. You could back away from the assignment or associate yourself with someone with experience with SFD with income.
 

Lloyd Bonafide

Senior Member
Joined
Jan 15, 2006
Professional Status
Certified Residential Appraiser
State
California
Does anybody have any data on whether a cell phone tower, (see attached), may have a positive or a negative affect on value? This artificial palm tree tower is on a 3 acre site with a custom SFR, (value approximately 900K). It generates about $14,000 per year in income for the owner, and the client is OK with the antenna being there, but they are possibly looking for evidence that it either does or doesn't have an affect on the homes' value.

My thinking is that it would have some positive affect or no affect on value, (now that the antenna is built), but I'm looking for some proof if it's out there.
 

George Hatch

Elite Member
Gold Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
In California the cell towers are usually sited on commercial use properties, frequently in clusters. Meaning, if one campany can negotiate a lease, others often follow.

The leases I've seen mostly run on multiple 5-year terms. It seems the cell companies are aware that technology moves quickly and a long term lease might not be in their best interests.

Most valuations I've done and seen with these are limited to figuring out the present value of the rents for the remainder of the existing term and, if the option period is soon enough, for the option period after the existing term. The Present Value of the rents usually involves discounting. I would venture to say that most residential appraisers probably aren't that comfortable with the technique, and prying an explanation that makes sense out of them might be tough.

It's kinda like having a guest unit that can be rented out right now, but might not be assumed in perpetuity.
 

Jim Onderisin

Senior Member
Joined
Sep 15, 2003
Professional Status
Certified Residential Appraiser
State
Illinois
There was a property in an unincorporated area of our county on which the owner built a cell tower. When the county realized he could legally put up the tower, they created a rule that towers could not be built on residentially-zoned sites. So the guy's property is legal, non-conforming. The tower was grandfathered, but could not be rebuilt if it fell. He tried to sell the property, first without the cell tower rights, then with the rights. He had it priced too high. Finally, he knocked the little sht of a house down and put it on market with the rights. Finally, two years later, he was able to sell the property. He started two years ago at $370,000 ask for the property with the tower rights. He finally took $235,000 for the property, sans the house, with the cell tower rights. I don't know if the info helps, but there you go.
 

Blueprint

Senior Member
Joined
Aug 25, 2005
Professional Status
Certified Residential Appraiser
State
Oregon
I am betting that there is a clear legal descrpition for the tower. Why not get the detailed scoop from the owner? Noboby can give you the answer you are looking for without more info.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
the lease might be recorded in the courthouse. Clearly only part of the site is encumbered by the tower.
 

Mike Boyd

Elite Member
Joined
Jan 18, 2002
Professional Status
Retired Appraiser
State
California
George touched on what my opinion would be. Why would it be any different than renting out the guest unit? If you are doing the appraisal for the property owner, you are appraising the fee simple interest....which would include the income from the cell tower. If you are appraising it for the holder of the lease....the cell phone company, you would be appraising their leasehold rights. In any case, the lease should spell out who OWNS the tower. So, if the cell company retains the the owership of the tower there would have to be some wording in the lease to that affect. I would not think that to be the case and that the tower, since it is affixed to the land, is real property and it would stay. There should also be wording in the lease on what happens to the equipment when the lease expires.

As long as the appraiser has the expertise to read and interpret the lease, I do not feel he is appraising anything that would require a certified general appraiser.
 
Status
Not open for further replies.
Find a Real Estate Appraiser - Enter Zip Code

Copyright © 2000-, AppraisersForum.com, All Rights Reserved
AppraisersForum.com is proudly hosted by the folks at
AppraiserSites.com
Top

AdBlock Detected

We get it, advertisements are annoying!

Sure, ad-blocking software does a great job at blocking ads, but it also blocks useful features of our website. For the best site experience please disable your AdBlocker.

I've Disabled AdBlock
No Thanks