The financial benefits derived from owning minerals are no longer reserved only for ultra-wealthy individuals and institutional investors… and it’s a real estate investment.
The “guy-on-the-street investor” is familiar with the typical real estate opportunity as a reasonable prospect for longer-term investments. It is an investment that is heavily promoted throughout the financial community.
There are hundreds-on-hundreds of articles, books, promotions, even TV reality shows “selling” real estate as an investment. In addition to over 126 million real estate owners in the US, there are about 1.3 million real estate agents selling who are members of the National Association of Realtors, so it’s all the investment rage, no wonder! (www.statista.com/statistics/196269/us-national-association-of-realtors-number-of-members-since-1910/).
Most all of these real estate opportunities are limited to owning the ground (surface rights) and the improvements that are built on it. For too many years, the private, qualified investor has been locked out of participating in mineral investments, often due to a minimum investment amount of $500,000 to $1,000,000 or more. You will see why these investors have been so interested in mineral investments.
WHAT ARE MINERAL RIGHTS
Owning a piece of real estate usually includes rights to the ground, or surface rights, plus the airspace above the ground and the minerals below the surface. Many are not aware that the mineral interests can be segregated or separated from the surface rights. Unique primarily to the United States, owning the mineral rights includes the ownership of any oil and gas, coal, diamonds, copper, etc., located under the surface.
Mineral interests also have very nominal management requirements/headaches, compared to improved residential or commercial real estate.
Income can be made several ways from owning minerals. You can lease the rights to another party for a lucrative upfront cash bonus plus receive hefty monthly payments for the value of the amount of minerals extracted. You can also re-sell the interests to a third party for its potential value or for a big multiple on earnings if minerals are being produced.
LEGACY INVESTMENT and PLANNING YOUR ESTATE
Owning mineral rights also gives the mineral owner more options from an estate planning point of view. The owner can enjoy having the benefits of lease bonuses and monthly income and then be able to bequeath the assets to your family or a favorite charity.
You will want to consult an estate planning tax consultant or attorney to set up these types of terms.
SEE ALSO: Mineral Rights ROI vs. Real Estate Investment ROI
Jack Nichols is Managing Partner of Redhawk Investment Group; a Texas-based oil and energy company involved the development and management of oil and gas properties including mineral rights investments.
The material herein does not constitute an offer to see nor is it a solicitation of an offer to purchase any security. Offers will only be made through a private placement memorandum to accredited investors and where permitted by law. Investments in security are not suitable for all investors who can withstand the loss of their investment. Investors should perform their own investigations before considering any investments and consult with their own legal and tax advisors. Past performance does not guarantee future results. This presentation is copyrighted material and only for the use by Redhawk Investment Group and its affiliates.