When people hear what we do, they go one way or the other. They either see the great benefit landowners enjoy when they get money for minerals, or they think anyone who sells their mineral interests is getting swindled.
We’ve written about this before, but it bears repeating; there are countless situations where it makes perfect sense to sell your mineral interests.
Will it make sense for you? The fact is there is no cookie-cutter answer to satisfy every situation.
That is why we never sit down with mineral owners trying to make a sale. We want you to be fully informed so you can make an educated decision. Sometimes that means selling, sometimes that means holding. Either way, don’t ever let anyone pressure you into selling. Get answers, but don’t get sold.
But, when does it make sense to get money for minerals you own? And what is the difference between leasing your land to get royalty payments over time vs. getting a lump sum for your minerals?
Let’s dive in.
Money for Minerals: When Does it Make Sense?
Again, I am not living your life. I am not in the business of telling people how to live their lives. I am, however, in the business of giving people the financial freedom to live their lives more fully when it makes sense for them.
Just as we don’t have a one-size-fits-all answer for everyone, no two customers are exactly alike. From the old woman in the shabby dress to the middle-aged man in a $3,000 suit, you never know who you will work with … or what problems they are up against.
Here are a handful of situations where mineral owners we have worked with have been thrilled they could get money for minerals in one lump-sum.
#1 Medical Bills
One past client’s life was literally on the line. Their hospital bills were piling up and they needed a liver transplant. I don’t know if you have priced liver transplants lately, but to say they are not cheap is a terrible understatement. The extra funds they received through a mineral rights sales was exactly what the doctor ordered.
A few years back we met a widow who lost her after a prolonged illness. The crushing debt from her husband’s unpaid hospital bills left her hopeless. The collection calls got so bad she couldn’t even get out of bed. She decided to sell. We handled her collection calls and the money turned her life around.
#2 Vacations, College Funds, Weddings, and More
Not everyone who owns mineral interests is a millionaire. Many mineral owners are everyday Americans struggling to make ends meet like the rest of us. They might have inherited minerals through an estate that wasn’t settled properly. They might have negotiated bad lease terms.
Either way, sometimes you need $10,000. Yesterday.
We have had clients take money for minerals and send all of their kids through college debt-free. One man able to fulfill his dream; to give his daughter the wedding of her dreams. After working tirelessly for decades without treating herself, one woman decided to sell and take a cruise for the first time. Her treat was timely. She sadly died just two years later.
As great as it is to own mineral interests, you can’t take them with you.
#3 Increasing Assets, Decreasing Liabilities
We work with a lot of families who own minerals, but we’ve worked with just as many businesses who need to unload assets. One man decided to double-dip. Instead of selling all of his mineral rights, he sold half. He took the money, bought land, developed it, and tripled his money in three years.
An oil and gas company owner went a similar direction. Instead of selling half, he chose to sell 25% of his mineral rights. He took the money for minerals and paid off a large mortgage. When he died 6 years later, he left his family debt-free.
The Check’s in the Mail
Of course, you can choose to get monthly royalty checks, and many people do. There are several situations where that makes sense, and there are plenty where it doesn’t at all.
Ideally, wells drilled on your property will keep producing at high levels for a long time. However, that’s not always the case. Many mineral owners end up feeling frustrated when their $150/month royalty check slowly drops to less than $50/month. They were counting on that $150/month to make their high-interest car payment when they could have gotten $5,000 all at once and bought the car with cash.
Give It Away Now
If you decide to get money for minerals, people are bound to ask; why did you give away your mineral rights? These examples prove people who sell don’t give anything away. They choose to convert assets to take full control of their income.
They are tired of waiting around. Their parents or grandparents worked hard to acquire mineral interests to pass on to their children, and they want to optimize the asset with which they’ve been entrusted so they can better provide for themselves and their children.
No hustle can last forever. If something is a bad deal people get upset and word gets around. If selling your mineral interests was a sham the market would not exist.
And if we were swindling clients, they wouldn’t be sending us Christmas cards to thank us for our services 8 years later. Though the lease terms we re-negotiated for her were pretty spectacular!
What Are Your Thoughts?
Have you ever gotten money for minerals? Was your experience good or bad? Do you have any questions about selling mineral interests you can’t find an answer to? Please leave a comment below!