Revealing 1031 Investment Options Secrets

According to the current scenario, the real estate investors are considering the 1031 investment options for replacing their property. Before jumping to invest in mineral rights, you should know about it well. Do not follow the statistics and invest in mineral rights instead of real estate property. We do not want you to think later after investing. On the other hand, smart investors always have queries and ask questions. We guess you are one of them, right?

The old scenario with this option involved real estate property, now people are more curious and interested in natural resources. Is it worth? Let’s answer it in a simple yet straightforward manner.

There are two types of interests, working interest and royalty interest. The working one is a real property interest but the royalty is not. This distinction of interests impacts the investors’ right and access to the property.

A working interest gives an exclusive right to enter a land to develop the natural resources. This one also includes the obligation under which you should pay for all the expenses related to the resource and it also covers expenses of operation.

Coming to the royalty interest. The investors working under 1031 investment options here only share a percentage of total production. The investors here have no obligations to share development or other operational costs.

If someone has a deemed working interest, it should qualify for the 1031 exchange. An investor is not always limited to exchanging the working rights with other rights. Having the option of ‘like-kind’ investors can exchange real estate rights with mineral rights, as it is more profitable.

What is Mineral Right?

With the term mineral estate, we describe the land with all minerals underneath. The mineral rights are sold as a whole or can be broken as separate interests such as mineral leases, mineral royalties or production payment. When you have a mineral lease, the lessee has the rights of mineral extraction. The lessee bears the production cost. A mineral royalty is a non-operating interest and the holder has no production cost. Finally, a production payment indicates the right of the mineral found in a place in exchange of an amount.

There could be no doubt that investing in mineral rights using 1031 investment options is worthier than real estate investment. For your queries, come to Ten31 Minerals.