Diversification. Almost every investor has heard the term, but how can you ensure your Self-Directed IRA is truly diversified? In the world of investing, there are constant changes and new opportunities, and finding new ways to diversify your portfolio can be difficult if you don’t know where to look. One asset, oil and mineral rights, have begun to take the stage in the world of alternative investing, yet many people are still unaware this asset is available, nor do they understand how it works. In this article, I have Troy Eckard of Eckard Enterprises with me, and he will be sharing how having oil and mineral rights as an investment can increase your future wealth and help diversify your portfolio beyond stocks, mutual funds, and even real estate.
Sarah: Hey Troy. Thank you for joining me. Today, Troy Eckard from Eckard Enterprises is with me. We are going to be talking about how you can use self-directed IRAs to invest in oil and mineral rights. Troy, thanks for being here with me. I’m eager to learn about this topic more in-depth. I’ve always loved watching you on our weekly webinars, and I’m excited to dive a bit deeper into the details about this unique asset class. First, can you tell me a little bit about yourself?
Troy: I have been involved in the oil and gas industry since 1985. My background is in Economics and Finance. I started off with a small boutique firm representing high-net-worth investors who wanted to directly own oil and gas interests (primarily back in the eighties) to participate in drilling for tax write-offs. Over the last 35 years, that career has evolved. Now, I own my own companies. I own pipelines, mineral rights, oil and gas wells. I’ve spent three and a half decades working on behalf and alongside high-net-worth investors who see the energy space as a great alternative investment. So, that is pretty much my career. It has been a long time. I am excited about the things that are changing; it has been a lot of fun.
Sarah: What was it that really got you excited about mineral rights as an asset class?
Troy: Well, I had a partner tell me something back when I was a kid, back in my twenties. He said, “You know, I’m not going to invest with you, because you don’t have enough road scars.” And I said, “What does that mean?” And he goes, “Well, I need you to go lose someone else’s money, and try to figure things out before I invest with you. You’re too young to know what you don’t know.” And so, I would say that is pretty much what led me to mineral rights. I have drilled over a thousand oil and gas wells. Dry holes, good wells, bad wells. I’ve had about every kind of scenario you can think of. As I became a little older, I realized I have essentially become my client. I am now a high-net-worth investor who is 57 years old, and I’ve noticed my own investment profile has changed dramatically in the last four or five years where I’m less at risk. I’m more risk adverse. I’m more about accumulating assets that will grow over time. And I’m more about cash flow. I was not that way five years ago. When I look at the energy space, which I completely love and enjoy being in, there is only one asset class that fits my profile and that’s minerals rights, because it’s no expenses, no liability, no risk, and monthly cash flow. It grows based on commodity prices and reserves. So, it has evolved as I have evolved as an old timer now. It’s kind of worked hand in hand.
Sarah: You led me right into my next question. What is it about mineral rights that make them a good investment? You listed a couple of things, but go in to a bit more depth there. Can you tell us why they are so good?
Troy: First off, let me be very clear. Mineral rights are only good if you buy the right ones. So, every acre of land in the continental United States has a surface right and a mineral right. There is only about 10% of all the mineral rights in the U.S. that have oil and gas. So, what you have to understand is that not only do you like the oil and gas or the mineral rights sector, but you have to understand what it really brings. So, was it gold mines? Is it copper? Is it oil and gas? Is it water rights? They are all-natural resources that fall under minerals. But for me personally, what I like about mineral rights specifically tied to oil and gas… I like the fact that it is an asset that is held in perpetuity. So, it’s just like traditional real estate. It’s mine. It’s deeded. I own it. I like that fungible commodity part of it. The second thing I like about it is a mineral right essentially is the landlord. I can lease my mineral rights to large oil companies who take on 100% of the risk. The capital, plugging, drilling, and environmental liabilities all belong to my tenant, which is the oil company, and I get a free ride. Essentially, I get a percentage of all the gross revenue forever, for every drop of oil and gas produced without any exposure to liability or costs. What more can I do as a passive investor, looking for passive income to find? I can’t find any other asset that matches that kind of description.
Sarah: I agree. Now, you mentioned that there are potential risks that could come up. Let’s talk more about that. If you are a client interested in mineral rights, can you talk about some of the risks that can happen if the value for those rights goes down?
Troy: Let’s start off with the most common thread that goes in real estate or any type of other asset class. You make your money on the buy. So, when you buy something, the first thing is that you have to understand the credibility or the reliability of expertise for the person selling it. So, you must know who you are buying from and what their motivation is. That’s the number one thing. The second thing is, in oil and gas or any type of mineral ownership, there is only one way those minerals become more valuable and that’s called “activation”. Somebody’s got to mine the copper. They’ve got to dig a mine for the gold. They’ve got to go drill a well. You can own the most oil and gas saturated minerals, but if nobody is willing to go drill it, they’re not going to come to the surface to be sold. So, there’s two key things: not getting ripped off by an unscrupulous individual or an inept, incompetent person giving you bad advice. Secondly, you must be a mineral owner where you know that somebody or a company, a lessee, is willing to go put forth the capital to develop and extract the natural resources in the minerals you’re in. So, the two biggest risks are pure rip off and crooks, liars, cheats, and thieves. The second thing is, not having a mineral that somebody is willing to go put money and go drill a well and produce oil and gas from. So those are the two biggest risks.
Sarah: Let’s talk about the due diligence that really needs to go into making sure that, when getting a mineral right, the person is qualified. They are honest. They have a good track record. How would an investor determine that a person has the right expertise in that space?
Troy: Well, let’s go back to common sense. It’s amazing to me how wealthy investors literally take common sense and they’d set it on the shelf when it comes to investing. It just blows my mind, but it happens every day. And I’m talking to highly sophisticated investors. Here is the simple answer. Well, first off, who are you? What do you want? Why are you talking to me? What is your background? Who do you represent? I see investors right now that literally invest in mineral right programs and on the website, they don’t tell you who the management is. They give you no background. They give you no credentials, no antecedents. They literally buy because it’s a pretty website. And so, when they find out they made a bad investment, I’ll do due diligence for them. And I say, “Well, you didn’t even ask who the guy was.” They say, “What do you mean?” I say, “Do you walk through a shopping mall with your wallet out, leaving a hundred-dollar bill hanging out and do you just give it to strangers?” You don’t right. Common sense tells you to avoid or to, at least, run your due diligence. Let’s start with the premise. Who are you? What are you calling me for? Why do you want me to talk to you? I need to know that in black and white; the who part is the most crucial. That’s because 90% most of these people that are selling investments are felons. They’ve had securities violations. They have ceased and desist orders. They’re selling illegal securities. They’re paying commissions without an investment firm. I mean, it’s rampant. It’s 90% and it’s not just in mineral rights. I’m seeing that in apartment complex deals. I’m seeing that in real estate transactions.
Sarah: Notes. All sorts of things.
Troy: So, that’s the first part. The second part is once you find a credible person, then I need to know the why. Why are you calling me? Why do you need my money? What are you trying? What’s the plan? And most people don’t have a plan. You know, back in the day, when I traveled to San Francisco to walk out a hotel and the street corner guy would come up to me in a black trench coat and go, “Would you like to buy a watch?” And he would have five watches inside of his coat. Well, that’s not a watch store. That’s not a watch distributor. That’s a guy trying to flip a watch! So, there’s no warranty. There’s no guarantee, and there’s no assurance. Then, if I have a problem with the watch, he’s not around. Most people calling or soliciting are going on platforms to solicit a product. They don’t have a plan. They have a deal. I don’t want to be an investor that buys a deal, because each deal has inherent risks with it. If I can find a sponsor or somebody that’s in a sector, that’s in an industry that has a plan and that has an entry and exit, then you’re telling me you have a general business philosophy that has some substance to it. But if you come and say, “Hey, I have four mineral acres for sale,” I’m going to say, “Okay, what are you going to do next month?” They say that they’re going to look for some more minerals. I’m just thinking how this person doesn’t have a plan. To me, I’m thinking you’re like the guy with the trench coat on the street corner. Most investors don’t ask that question. If you asked me, “Hey, Troy, what is your company doing next month?” I can tell you what we’re doing, and where we’re going. I can tell you six months from now what I’m doing, because I run a viable business. I’m not a guy with a trench coat.
Sarah: I like that analogy and those are good points.
Troy: Yes. And the last thing I would tell you is to run the numbers. I did some due diligence this week for a couple of investors, looking at some oil and gas ventures for drilling. We don’t sell drilling deals. We’ve mainly focused on minerals. And I said, “Let me just run the numbers.” I’ve been doing it for 35 years, and by the time I ran the numbers, the first oil deal was being marked up 300%. For every $200,000 that was being written as a check to participate in the drilling deal, $140,000 was profit. One in the guy’s pocket. He could care less if you hit a well, and the investor was just blown away saying, “How did you do the math?” I thought, “Well, I have a calculator. I got past second grade.” This is the math. And he goes, “Why didn’t I see that?” I said, “I don’t know, but I’m here to help you if I can.” But that means that he’s one of a thousand people; the other 999 wrote a check or participated. It’s just common sense. It’s not getting excited by the sales pitch. It’s not getting excited by the euphoria. It’s taking basics one step at a time and looking at the who, what, where, when, why, how. That’s it.
Sarah: I love that. And you touched on this next question, but talk a little bit about some of the due diligence you should do on the actual investment. What are some questions people should be asking before really getting involved? If they’re considering this as an investment?
Troy: There’s always four questions. Whether you’re selling an ostrich farm, an oil deal, or real estate deal the four questions every investor has are basically the same. It’s how much money do you want me to invest? How much risk is involved? What’s my return? And what’s the timeframe? You can ask these if you want to be in a cannabis investment or note investment or apartment; it’s all the same thing. Well, let’s use an example. If I had two 10 story buildings that are a hundred feet apart and I put a 2 x 6 board across it, and I said, “Sarah, I’ll pay you $50 if you’ll walk from one building to the other, without a safety net.”
Sarah: No, thanks!
Troy: Right. You’d be like, “Are you out of your mind? If I fall, it’s a hundred feet, I’m going to die.” Okay well, you won’t do it for free. How about a thousand dollars? And you go, “No, not even close.” Okay, well, how about for $10,000? I might get one out of a hundred people go for 10 grand. And they say, “I’ll try it, because I need the money.” Right? But you might get 9 out of 10 people who would do it for a million dollars. So, it goes back to how much risk, reward, and time. Right? In this case, to go deeper into your question… on the asset itself, I need to know what’s the catch for me? What’s the “gotchas”? How can I lose my money? What’s the likelihood I can lose my money and what are the steps in which I can lose my money? Essentially, I don’t care about the upside. I don’t care about the arm waiting. That’s all gravy. My number one concern is if I give you a hundred thousand dollars, how do I know I’m going to get my hundred grand back? And if I don’t, what are the stumbling blocks that keep me from getting the money first and foremost in an investment? Your number one risk is if you invest in a structured venture, like a partnership, an LLC, a joint venture is that you don’t own the asset. You own a piece of the entity. Now you better look at the management agreement. You better look at the contract. You better look at the managers, because you virtually have no rights. Those contracts were written. It says, I’m in charge. I make the rules. You have no rights, and so therefore you don’t own anything. You own a piece of a company. That’s the number one risk.
Sarah: I definitely see the risk there.
Troy: The second part of that comes once you get comfortable and certain that it’s a good manager and that the company agreements are good. Now my question is, “What is your plan?” Maybe I’m a five-year investor, but he wants to hold it for 10 years. In that case, I can’t get my money out. I can’t liquidate. What if I want to retire? What if I’ve got bad health? I may be stuck in a venture with no exit, because it’s different than the majority of the owner. So, it’s not just the structure of the deal. What are the terms of the structure? Is there a liquidity event? Is there some way for me to exit where I can get out if I have to? And that’s always important, because nobody thinks about the exit. You know, when you go to a brand new apartment or house, nobody goes, “Where’s the fire extinguisher? Where’s the ladder and how do I get the hell out of here?” They don’t think of that, but that really ought to be your first thought. Getting in is easy. Like a marriage, getting out is a nightmare, right?
Sarah: Oh my goodness. I love the correlation there.
Troy: I got a lot of clients over the years who have been divorced, and I’ve heard about their nightmares. I’m still married after 35 years, so I haven’t had that experience. But once you get past the structure of the deal and whether you own the asset or on an entity, and once you get past the terms, then the real question is, “Are your interests aligned? Is what you’re trying to do… match that?” Don’t put a square peg in a round hole. If it’s in an illiquid, long-term venture and it doesn’t match, don’t get enamored with the opportunity. Simply say, “This does not work.” If you can stick to the basic principles, you’re going to avoid 9 out of 10 mistakes. That’s really what it is. It’s not a mistake in the asset, per se. The mistake is that you should have never got involved in the first place, because the top three items did not match. In our business, we like to do direct ownership, whether it’s drilling a well, whether it’s minerals, et cetera. The only time we put them in structured entities is if it’s for protection from liability or because it facilitates the ability to make the investment. It requires, maybe, a single entity to own it. Other than that, we like direct ownership, because somebody may not like my voice or the way I comb my hair and they say, “I just want to get away from you, Troy.” And I say, “Okay, great. Here’s your interest and have a nice day.” You can do it on your own, but that’s something that’s real important to me as an investor.
Sarah: You mentioned how some investments can be long-term, making liquidity difficult. So, once mineral rights are acquired, whether they’re in the SDIRA or not, how does an investor liquidate those assets? How do they get out when they’re ready?
Troy: So first off, let’s make sure we all know that a mineral right is a real piece of property, like real estate. The IRS classifies that it’s allowed for a 1031 tax exchange. So, it’s like an asset exchange. It is also available in your self-directed IRA. It fits all the necessary boxes that you can check for the right type of asset as real property, which is why it’s a great alternative investment. With that being said, because it’s titled, you own it. It’s defined geographically, it has legal description, and it’s a transferable asset. There are buyers all over the country that are trying to buy mineral rights. As an example, yesterday, we went on to an online auction. There were different lots of interesting wells, property, and minerals that were for sale. We, as a mineral buyer, bought minerals on that auction site. And we think we got it for about half of what it’s worth, because the seller did not know what they had. They’re inexperienced. They put it to the market with a reserve value that was half of what it was worth. We didn’t figure it would sell for that, but we made an offer, and the gavel went down, so we bought it.
Sarah: And that’s doable?
Troy: Yes, we can go to public auctions. There are private auctions. There are also private buyers with a group called Energy Net that has 22,000 registered buyers. You can list your minerals on there, and you’ll have 200 people bidding on it every 15 minutes… bidding on your minerals. The way we do it – because we believe in protecting the appraisal or asset value – if a client invests with our firm, we like to help them facilitate a maximum price or value so that it doesn’t underpin or lower the value of our minerals that are in the same property. So, either we’ll buy them back or we’ll have existing high net worth clients that will buy them back. Or, we have direct professional mineral buyers around the country that are looking for minerals that we will go to and say, “We’ve got an asset for sale.” Within my group, we go to specific known buyers. If it’s a blind group, let’s say somebody bought multiple minerals, and they come and say, “How do you help me?” then we say, “Alright let’s talk about what you have. Let’s define where they’re located. Let’s get the legal description. And now let’s go to the best auction that’s going to have the highest number of bidders and let’s put it to the market.”
Sarah: Okay let’s say, everyone’s read through this. They love it. They want to go out and do it. Can anyone just go out and acquire them? You mention “blind investors”. I would assume that means this mineral rights are available to anyone, regardless of experience?
Troy: Anybody breathing air can buy a mineral right. You can take a homeless guy with a hundred dollars and he can walk over and find a mineral acre for sale for a hundred dollars in virtually any state in the country. All he has to do is give the hundred dollars, pay a fifty or a hundred dollar filing fee to file with the courthouse. Now, he’s a legal mineral owner. Every acre in the U.S. has a mineral right. So, literally people in the city who bought a house in a subdivision, if that developer did not extract or exclude the mineral rights with those homes, the homeowners look at their deed and title and they realize they own the minerals underneath their house. Problem is, it’s not sitting in an open field where somebody can go drill oil and gas. So, the nice part is anybody can own mineral rights, but when you move it into a security and are looking to sell a mineral right/invest in a mineral right through a third party, you now have a much more limited access to mineral rights. They could sell you junk if they wanted to. But I’m saying: it’s more transparent, it’s got disclosure, it’s got SEC requirements and, now, it becomes a much more tradable, public investment from that standpoint.
Sarah: Makes sense. Get the experts.
Troy: Now, we sell mineral rights that we own every day. We sell our own inventory, but we still provide the deeds, the title, cash flow, and the statements. At the end of the day, when you buy those mineral rights, again, it has to do with where it’s located and if it will ever see activation. It’s really important to understand that mineral rights can be bought by anybody, but who really qualifies in our case, are accredited investors. We don’t deal with anybody with less than a million-dollar net worth.
Sarah: Oh wow, got it. Okay. That’s important to know. And I’m sure everyone is different.
Sarah: Now, we talked about how you can do this in a self-directed IRA. We determined that this is, in fact, an asset that can be held. Additionally, it’s similar to real estate in terms of the titling and deeds… let’s flip it. How is it unique? How does it differ from a real estate investment, which is a very common SDIRA asset that we see at Quest? And then we’ll talk a bit further on what’s required for it.
Troy: In real estate terms, most real estate pros understand “triple net”. Triple net means I don’t pay any expenses. I get a net check every month, which is my rent. The tenant is going to pay the cost of insurance, maintenance, et cetera. In the mineral rights business, it’s the exact opposite. We actually have what’s called “a 100% net”, which means that when we lease our mineral rights to a particular oil company, under that lease agreement the oil company is our tenant, and we’re the landlord. They agree to pay 100% of all the costs for drilling the wells, completing the wells, producing wells, and ongoing maintenance. We never get asked for a single dime of any part of any expenses ever. In the state of Oklahoma, there’s no property tax. But Texas has high property tax.
Sarah: Interesting! I did not know that.
Troy: So, you have holding costs with real estate. Well, there are no holding costs with mineral rights. There’s no cash calls and no capital calls. There’s also no tenant improvement. There’s no landscaper and there’s no insurance. It is a 100% net income asset, but it’s even better. Where you might have a triple net, or maybe have a gross profit lease (where you’re taking part of the profits from your tenant). In our case, as a mineral owner, in the original lease agreement with the oil company, we get paid a lease payment upfront in cash. They lease it; they don’t pay month to month. They pay 3-year leases up front in cash. So, there is no risk of not getting paid. That’s really cool.
Sarah: Big time.
Troy: Then, on top of that, you negotiate a royalty percentage. The royalty percentage is a percentage of all future cash flow from the oil and gas extracted forever, not just for three or five years. If they have wells that produce for 20, 30, or 50 years then, every single month [at] the top of the revenue distribution, the first out the door is the royalty payment to a mineral owner. So, I get a 100% net cash flow every single month for every drop of oil, every molecule of gas forever, no matter how many wells they drill. I could care less about the price of the commodities. No other investment exists like this, period.
Sarah: Yeah, I’m shocked. I don’t know what to say, because it sounds like a really good investment. Especially if you know that you’ve got that security upfront as well. How come more SDIRA investors don’t know about this?
Troy: The reality is Sarah, it hasn’t been around. This all evolved as a marketable asset for private investors within the last five years. The reason being is, when you used to see wells drilled, they were drilled, vertically with one straight hole in the ground. The size of the hole was a size of a seven-inch paper plate, like you’d go to a picnic. But, if the oil company drilled the well and it was dry, whoever’s minerals were tied to that well were basically condemned. It’s like having a three-legged horse. Who’s going to buy minerals from a well that was drilled dry on your property when there’s another zone deeper? And I say, “I don’t care.” Most likely it could be dry, as well. Then they moved to this new horizontal shale drilling. Now, it’s about a 99% success rate. This means that now I know I’m going to have a well, and now – because of technology, and because of how highly saturated these reservoirs that are in these shell basins are – I know I’m not going to have one well. I might have four, eight, or even 36 wells on my property, which means I no longer have to take the risk. But, this really wasn’t a tradable commodity five or six years ago. It opened in 2010, but private equity groups came in with billions of dollars and they bought $50, $60, and $70 billion of minerals across the U.S. The problem? That wasn’t even like a sand granule. This is about a half a trillion-dollar market today. They threw $70 billion at it. They bought all they can handle. They’ve left the buffet. Now, there’s more than enough for small groups of investors like us to go buy $50, $60 million a year for the next 30 years. It is a wide-open market. It’ll be here forever; it’s got plenty of inventory. You just need the right captain of the ship to navigate. That’s the basics.
Sarah: Yeah. I appreciate you answering how long it’s been around. However, I want to just jump back really quickly. We were talking about know how this type of investment would be unique as opposed to a real estate investment. Let’s talk about maintenance. Inside the IRA, obviously the IRS requires evaluations and status reporting. How does that work when you’re dealing with mineral rights? Who does it? Is it as simple and reliable as reporting for more traditional assets?
Troy: Yeah, I definitely think it is. We have two ways of doing it. Generally speaking, we have a lot of clients with SDIRAs who have their money in energy investments with us. We will run it through our accounting department. We have an outside CPA, and we’ll provide those year-end reports. The other thing we do is, we have our own internal acquisition and management team that does a portfolio analysis every single month. We’re able to tell cash flow results and capital base from where you started to what we think it’s at. For the most part, mineral rights don’t go down in value. They go up in value, because you’re taking minerals and titling them… similar to titling real estate. We’ve also hired one of the #1 engineering firms in Oklahoma, and what we’ve hired them to do is do a reservoir and cash analysis on our minerals. So, by the end of the year, we’ll be able to have an assumptive engineering report, because this company does a lot of the year-end reports for publicly traded companies. Because of all the work this engineering firm does, we have firsthand reports, documentation, and standardized reserve and cash flow analysis that we can then apply to our mineral portfolio, which then allows us to be able to push that down to our private individual high net worth investors’ portfolios. We have our own in-house engineer who does that. We also have our own software that we subscribe to that does the same thing on analysis and reserves. We’re able to do – just like real estate with appraisals and discounts and fair market value – the same thing with minerals. We’re able to give those reports in a timely manner every year, just like normal, traditional real estate.
Sarah: It sounds like those systems make it pretty accurate. Is there anything else that you would want our audience to know if they’re interested about getting involved in this type of asset class? Anything I haven’t asked that you think is important to mention?
Troy: Well, probably today, Sarah, one of the most relevant things is the media. The media has jumped on the bandwagon these last 12 to 24 months. They’re saying the fossil industry is dead. They’re saying that oil and gas is gone and now it’s the green deal. Now, it’s going to be alternative energy with windmills, solar, hydro, and everything else. But, the reality of it is, the investors out there need to understand that everything you have in your room and everything I have in my room is made from, transported by, developed from, or a by-product of a barrel of oil. So, when you have this green deal, the main thing they need to understand is that the entire world is burning a hundred million barrels of oil a day. The reality is, when you burn it, it’s gone. So, we have a diminishing resource with an increasing demand and no substitute for the byproducts. Every Tesla electric car is literally made a 100% from oil and gas. The tires, the metal, the machine shop, the electricity, and even the highway it rides on. So, I don’t have a problem with alternative energy, and I don’t have a problem with these additional components that will help lighten the pressure on oil and gas from the standpoint of being energy of choice. But in reality, oil and gas demand is going to continue to rise. Oil and gas supply is going to continue to shrink. In today’s environment – with the current administration – they’re implementing things, such as federal lands being restricted and restricting capital for the oil and gas energy. All that’s happening is, this diminishing supply is now being absent of capital. As an investor, I’m always looking for that economics 1-on-1, supply and demand. I have rising demand with a low supply. How do I participate in that? Well, you can buy public stocks. The problem is now you’re subject to the public market. If the market goes down, so does my energy stock. But, with direct ownership, I’m truly at the market-to-market value of commodity prices today for oil and for gas. So, what I would like to just mention, whether it’s in your self-directed IRA, a 1031 exchange, or your normal investment account, if you don’t own energy in your portfolio, you have a three-legged stool. The three-legged stool means I am missing the one component that allows me to balance my portfolio.
Sarah: You said it. Diversification is so important.
Troy: Right. So, if I have a stock market portfolio that starts to drop, it’s usually because we have inflation with rising energy costs. The reason why the stock market has done so well the last six years is because we’ve had cheap energy, right? Cheap interest rates. But… if I own mineral rights and the stock market goes down, my oil and gas rights are going up. The stock market’s looking like it’s at its top. And it’s coming down a little bit, right? The value of the dollar is sinking. What’s happening to oil? We’re over $65 a day. Oil is going to be over $100 dollars a barrel in the next 12 months. And if you don’t own it, your portfolio is out of balance. So, it is a great portfolio tool and a great asset to have in some small percentage of your overall investment. Every other investment, like your real estate portfolio is going to be affected negatively by rising crude oil prices. How are you going to get the electricity for your tenants? How are you going to pay more for that sheet rock and those boards and that transportation and that lawnmower out there mowing your grass when prices go up? All you have to do is look back to 2008 when oil went to $145 a barrel. The economy was horrible, and the dollar sunk down into the $70s. The inflation rate was sort of minimalized, but at the end of the day, because we had such high oil prices, it killed the economy. But not for me. I drove a Hummer and I liked eight miles a gallon. I was filling up at $6 a gallon, smiling from ear to ear because why? I was balanced. So, I would just leave your audience with the fact that, whether you ever make an investment directly in minerals, or you look at buying a public mineral fund, or you’re looking at some other type of mineral asset, you must be – and I’m going to say this bluntly – you must be in the market. This is not the type of investment to get your toe wet. You’re have to truly be a believer that energy is a great asset to balance your portfolio through a self-directed IRA, like with Quest. I’d say 95-98% of most investors have zero direct oil and gas in their portfolio. I don’t know why, but they don’t. But I’ll be blunt and tell you what you should do and what you shouldn’t do. I’ve told probably eight out of 10 people, direct oil and gas is not for you.
Sarah: I think that’s good!
Troy: I’ll say, “Go buy a stock. Be in the space, but not directly.” But, I also have had a lot of partners that have joined us because they finally understand that it’s an important asset to hold. We’ve been strategically working our tail off with very sophisticated investors, because this evolving mineral market is so new. Many people are like you going, “How is that possible? You can own something with cash flow and no risk? Why wasn’t I hearing about this five years ago?” Because it really wasn’t around, you know.
Sarah: This has been so helpful and eye opening. If someone wants to get in contact with you, how can they do that?
Troy: [chuckles] You can call my probation officer. He’ll tell you where I’m at.
Sarah: You’re so funny Troy!
Sarah: Awesome. Well, thank you so much for joining me today. I know I learned somethings I didn’t know and I’m sure our readers did, too.
Oil and mineral rights are just one of the many great options available for you with a self-directed retirement account. If you would like more information about how to invest in oil and mineral rights or other alternative assets in a Self-Directed IRA, reach out to a Quest Trust Specialists for a free conversation. Start diversifying your portfolio today! To learn more about how to invest in mineral rights with a self-directed IRA, schedule a 1-on-1 consultation with an IRA Specialist by clicking HERE.