With the volatility in the stock market and concern over 401(k)s and IRAs, many people are gravitating toward cash.

A year ago, I mentioned a trend in investment options called DPP or Direct Participation Programs. These investments are usually done as limited partnerships or subchapter S corporations, and usually require some type of qualifications for investment. 

DPPs allow an investor to directly participate in the cash flow and tax benefits of the underlying investment. They are generally passive investments in real estate or energy-related ventures. 

This article discusses a DPP that pertains to the advertising and communication industry. If you have ever gotten off a yacht and driven in a car, you have seen them in full view: billboards. They are all over the place. Companies advertise more than ever to generate sales by generating attention to their products or services. 

This limited partnership concept has a different twist compared to the one that I wrote about a year ago while still maintaining the multimedia concept. 

A quick review of the concept I discussed a year ago: a company building a portfolio of 1,000 signs with the intention to then sell them in a block to a specific type of buyer. While this company was in the accumulation process, it received rental income. 

Additionally, it also converted some of these billboard structures into cell phone towers and/or digital billboards. The company already had a physical structure in place in a strategic location. All that needed to be added for additional revenue is the cell companies’ equipment and this is at their expense. 

If the additional cost of going digital justifies it, then the rental income could quadruple because of multiple ads on the same screen. These are obviously cheaper avenues for both the cell company and the billboard limited partnership: converting an existing structure verses building a new tower and securing the land lease to install a new tower. Without these costs, there’s more potential return for the investors.

With this accumulation concept, the potential exists to generate hirer returns for the partners. This venture can last a few years as the goal would be to develop a portfolio of about 1,000 locations.

Going into this business plan, the limited partnership knows the price spread and the market price for selling the portfolio to major communication companies.  

This investment option does not work with single purchases and only deals with group locations for a greater profit for investors. For the investor who wants diversification, this is an option that provides some interesting income options.

The principals of this limited partnership have now taken this concept a step further. Given the credit market today, there are many land owners that have billboards on their properties and are successfully collecting rent from them. This limited partnership finds this type of land owner who is short on cash or desires liquidity. This limited partnership offers to buy just the easement portion of their property.

A secondary benefit to land owners is that they pay a one-time capital gains tax on the sale of the easement property instead of recurring tax on the billboard income.

This type of investment can offer an attractive quarterly dividend along with a bonus return after five years when the program is sold institutionally and ends. 

In the wave of uncertainty in the stock market, this could be an option to produce income and growth.

Information in this column is not intended to be specific advice for anyone. You should use the information to help you work with a professional regarding your specific financial goals.