Savvy investors know it’s important to diversify their portfolios. Real estate is considered a good way to protect your wealth. As President of Redstone Resources, LLC, I know that mineral rights are often overlooked as an investment class, but you should consider it.
What are Mineral Rights?
Mineral rights function similarly to property. They can be sold, leased, or transferred, like other types of real estate.
However, rather than being above ground, mineral rights refer to the property and resources below the surface.
Mineral rights include metals, mineable rocks, and fossil fuels like coal and natural gas. Mineral rights give an individual the right to extract minerals from the ground or receive payment for them.
Mineral rights are usually considered separate from surface real estate or property.
What Can Be Done with Mineral Rights?
Property owners who discover minerals or other natural resources on their property have a few options.
They can sell the mineral rights to companies. This can provide them with periodic royalty payments or a large up-front payment. They also have the option to lease the mineral rights, which allows companies to extract the resources for the duration of the lease.
Mineral Rights Royalties
As a long-time professional in the energy field, I know that when a property owner leases mineral rights, they typically receive a portion of the proceeds from the resources extracted from the property.
It’s common for the owner of mineral rights to receive between 12 to 25% of the revenue generated by wells drilled on their property.
Mineral Rights as an Investment Opportunity
Mineral rights can provide an excellent investment opportunity for investors who want to diversify their portfolios.
Mineral rights can provide steady recurring revenue. This type of investment also falls under IRS tax code 1031. This code allows an investor to defer capital gains taxes when they sell royalty, mineral rights, or property in some situations. It must be traded for another property that qualifies or reinvested to meet the requirement.
Mineral ownership as a passive income source is a high-yield investment with a low-risk ratio. Rental properties require maintenance, and landlords lose money if there’s a vacancy. Royalty owners aren’t responsible for the costs of drilling or developing the property.
The Key to Success
The key to profitable mineral rights purchases is to select the right company to work with. A mineral rights company has the expertise to identify lucrative mineral rights and the resources to develop them.
Working with this type of company makes the process easy for property owners and interested investors.
About Me: Sanjit Bhattacharya
I have more than 25 years of experience as a business leader and entrepreneur. Currently, I serve as the founder and president of Redstone Resources, LLC.
Redstone has developed positions in many resource areas, including Bakken, Haynesville, STACK, SCOOP, and MERGE plays. The company entered Marcellus and Utica plays in 2016. They are now moving into the Permian, Midland, and Delaware basins.
Under my leadership, the company has aggregated and divested a significant amount of minerals, as well as non-op interests with an excellent track record.
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