MINERAL RIGHT ROYALTIES ARE ONE OF THE MOST EXCLUSIVE 1031 ELIGIBLE ASSETS

While mineral interests are considered like-kind real estate by the IRS qualifying for a 1031 exchange, they are not structured as DSTs. Unlike a traditional 1031 or DST, mineral rights are offered as individual deeded real estate beneath the surface. Mineral owners hold interest in sub-surface real estate from the crust to the core and are entitled to compensation for everything produced from their land. That means when an energy company drills a well and produces oil and gas, they are required to pay the mineral owners a percentage of the gross revenue from all oil and gas produced. This is called a royalty. Mineral owners do not drill wells and are free and clear of any drilling costs or liabilities, they're just the real estate owner beneath the surface and their tenants are billion dollar oil and gas companies that pay rent or royalties for what they produce from our country's most active shale plays.

Mineral rights 1031s have the potential to generate higher monthly cash-on-cash returns than most other DST options. They typically target a cash-on-cash monthly distribution between 8% to 10%+. There's also an active secondary energy market that allows exchange investors to sell the a portion or all of their ownership anytime after their exchange.

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