Right now, traditional investing faces a lot of uncertainties and challenges. In order to meet those challenges head on, it’s more important than ever to diversify our portfolio, hedge against risk, and find ways to add streams of passive income.
That’s why more and more physician investors are turning to mineral rights investing. It’s about fine-tuning our portfolios to maximize passive income returns.So if you’re looking to boost your earning through passive income, mineral rights offer you one of the best opportunities to optimize your portfolio as you work toward achieving your financial goals.
In order to invest successfully, you need to understand what mineral rights are, the right strategies for successful investing, and work with your community or a third-party company, such as Eckard Enterprises, to access the benefits of expertise and experience. Eckard’s expertise in this industry is unmatched, and their services have helped clients unlock significant and life-changing income.
But where should we start? On the journey to financial freedom, education is key. So let’s start there.
What Are Mineral Rights?
Like stocks or bonds, mineral rights are potential investment commodities. You can buy them and sell them just like any other investment asset class.
They grant you ownership of the minerals below the surface of the owned area of land. Somebody else might own the land itself and the right to build structures above the surface, but that doesn’t stop your right to access and extract the minerals underneath.
What makes mineral rights different from most other forms of investment? Easy. You start making passive incoming almost instantly.Those payments most often come in the form of royalties. Essentially, a company will want to lease your land in order to extract minerals, and you’ll earn monthly royalty checks. The sum you earn is dependent upon how much material is extracted.
Generally speaking, mineral rights owners receive 12.5 to 25 percent of the revenue from the wells drilled on their property. Adding a stream of passive income with such a high percentage return is, to say the least, a significant boost to your overall portfolio.
Even better, once the contact is set, you don’t have to do any of the work. It’s completely passive. The company who leases the land will foot the bill for land surveying, well installation, and drilling. You just need to sit back and wait for your checks to come in.
Keep in mind that, with mineral rights, no two contracts will look the same. It can depend on the material being extracted, the results of a geological evaluation (measured mineral richness), the location of the property, if there are already proven wells, and so much more. These and other factors will determine the royalty percentage you receive.
To navigate all of that, you will likely need to work with experts trained in mineral rights investing, but it is nonetheless crucial to do your own research. The more you know, the more you can leverage mineral rights to optimize your passive income.
What Are the Benefits of Mineral Rights?
Once you start investing in mineral rights, the benefits are many.
No Unexpected Costs
With some forms of investing—particularly being a landlord—there are costs you need to factor into your due diligence. Things like unexpected building maintenance and property management can eat away at profits if not carefully considered.
With mineral rights, you don’t need to worry about paying for any aspect of the mineral extraction. Machinery, unexpected repairs, expensive maintenance, and salaried employees are all costs that fall onto the leasing company.
Limited Liability
While you receive royalties, you won’t be held liable for any aspect of the operation. The company that leases your land is liable for developing or operating the wells, not you. That makes mineral rights investing a rare combination of high-yield and low-risk, the perfect asset to diversify your portfolio and hedge against risk and inflation.
Moon Investment
But there are lesser-known advantages to investing in mineral rights. For one, there is the potential for outsized returns. This is what I call a “moon investment,” where your return is much higher than your initial investment.
Leasing companies are always surveying properties to place new wells. If your mineral-rich land is found to have abundant natural gas or oil, then its value (and your royalties) will increase substantially.
Greater Access to the Market
Also consider that mineral rights ownership is less well-known in the investing world than traditional assets like stocks, bonds, and real estate. Sometimes, deals to be had are difficult to access, spread thin by an oversaturation of investors. That means there is less competition in the mineral rights industry, giving anybody access to high returns.
Tax Advantages
One final advantage I’ll leave you with is the potential tax advantages associated with owning mineral rights. But before I start, don’t forget to consult a financial advisor or tax professional before you move forward with investing.
In general, mineral rights owners can deduct the depletion in mineral value to your mineral rights as the mineral is being extracted. That helps offset any income tax applied to your royalties. Elsewhere, and if they are subject to you situation, you can also deduct for the costs associated with obtaining leases, purchasing mineral rights, or conducting geological surveys of the land.
Is This a Short-Term or Long-Term Investment?
I’m often asked how to approach mineral rights. Is it for short-term or long-term investors? The answer is both! If you are at the tail end of your investment timeline or just getting started, you can realize significant returns from mineral rights investing.
How can that be? From the short-term perspective, you could collect passive income in three ways: 1) a signing bonus or upfront payments built into your lease, 2) the delivery of steady royalties immediately, and 3) the potential sale of the rights or lease when you are looking to exit the investment. In short, you can curate your mineral rights investment to match your timeline needs.
In terms of long-term investments, the major draw is the promise of ongoing royalties. And as mineral-rich locations get scarcer, the value of your mineral rights will increase over time. So, the longer you hold onto them, the more wealth there is to be made.
Long-term, mineral rights all but add a guaranteed stream of passive income. And as I’ve written about before, reaching financial freedom is possible when you build at least seven streams of passive income. So why not add one that is virtually a sure bet?
Effective Investing Is Key, Get Started Now with Eckard Enterprises
Mineral rights is an ever-growing investment industry. It’s a unique opportunity that allows you to build a life of financial freedom.
But there are quite a few options on how you can invest. There’s direct ownership, partnerships, exchange-traded funds (ETFs), private equity, REITs, and over a dozen more. Each investment option demands its own research and carries its own risk. To say the least, it can be overwhelming. That’s why I work with Eckard Industries.
With over 100 years of combined mineral rights investing experience, they provide unmatched and industry-leading expertise. Their team has a track record of delivering high-quality investments for clients looking to maximize returns. Their best-in-class, reliable service uniquely positions them to help you protect your wealth while achieving your investment goals.
Want to learn more? Earn life-changing returns and add streams of passive income by speaking to one of Eckard Enterprises’ qualified wealth managers today! Click on this link to schedule your free consultation or to receive an Investor Kit.
Peter Kim, MD is the founder of Passive Income MD, the creator of Passive Real Estate Academy, and offers weekly education through his Monday podcast, the Passive Income MD Podcast. Join our community at the Passive Income Doc Facebook Group.
