Keep or Sell Mineral Rights?

J. Paul Getty once said that the meek will inherit the earth, but not its mineral rights. He was talking about how you have to be bold and willing to take lots of risks to achieve mineral rights. It seems like keeping mineral rights takes more and more guts every year. As globalization continues to occur at faster rates and more and more countries are developing, the oil market is becoming more unpredictable than ever. A neighbor of mine came into a large plot of land in west Texas after his grandfather passed away. He was unsure if he wanted to hold onto the mineral rights that came with the land. We discussed the issue at hand for a long time and searched the web to see if there were any services that helped with that sort of thing. We found out about The Mineral Auction. They help people looking to sell mineral rights find a buyer and get the best price for their land. Their brokers allow you to get a fair evaluation of your land so that you and potential buyers know what you’re getting into. If you aren’t sure of how much your land is worth, you may be contacted by a buyer that tries to get you to take a bad deal. Because most of us don’t have the technical knowledge to evaluate land, a private buyer may try to convince you that your land is worth far less than it actually is. Brokers like The Mineral Auction help to prevent these swindlers from succeeding.

Owning mineral rights in the Permian Basin is risky business these days. One day your land could be valued at millions of dollars, and the next it could be valued for pennies on the dollar. It’s just the nature of the business as oil companies change their extraction plans with the economy. My neighbor and I discussed how land was a good investment, but putting the money into a stock portfolio or other real estate may be a safer option. When you sell mineral rights, you can take the money from those rights and invest them into several different things rather than having all of your capital tied up into just one thing. With the money, my neighbor could turn to a financial advisor that manages some of the money in a portfolio. This sort of investment is never going to increase or decrease exponentially overnight. It’s more likely to steadily increase over the course of a 15-20 year period. This is a great option for my neighbor who is looking to pay for his children’s college and retire in his sixties. He is also considering putting some of the money into other property ownership. He may buy a home and rent it out to the college kids that move into our town from year to year. With a house, he can make money from the rent. Also, if the house appreciates in value, he can sell the property at a profit later on. It’s a win-win situation. This is why we think diversification is probably a better option than holding onto mineral rights in this unpredictable economy.

Author: Danny

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