Exploring Huge Tax Benefits and Unique Profit Strategies in Oil and Gas

Land is at the heart of real estate investment. Some investors build on the land. Others profit from growing on the land. 

But today we’re talking about the opportunities that lie UNDER the land … oil and gas. 

Many investors hop into real estate because of its tremendous tax breaks … but that often only applies to PASSIVE income. 

Oil and gas offer huge tax benefits that apply to ACTIVE income … that’s why high-income earners love this niche. 

No investment is perfect … some forms of oil and gas investing come with high risks along with high rewards. That’s why we called on a seasoned Texas oilman to learn more. 

We’re exploring exciting strategies for finding more predictable profits and tax benefits in oil and gas. 

In this episode of The Real Estate Guys™ show, hear from:

• Your drilled-in host, Robert Helms
• His drilling-down co-host, Russell Gray 
• Founder of Panther Exploration (PANEX), Bob Burr

---

Listen

---

Subscribe

Broadcasting since 1997 with over 300 episodes on iTunes!

 

 

---

Review

When you give us a positive review on iTunes you help us continue to bring you high caliber guests and attract new listeners. It’s easy and takes just a minute! (Don’t know how? Follow these instructions).

Thanks!

---

A unique way to catch a break 

Today we’re talking about a niche within real estate that has some unique upsides and some great tax benefits … and it’s something you might not have considered before. 

Oil and gas is a very different type of investment … but there is a huge tax advantage to oil and gas investments that doesn’t exist in too many other investment categories. 

So, if you’re at the end of the year, and you’ve got a big tax problem, and you’re trying to figure out where to deploy some capital … you could make an investment and get a tax break. 

Energy is forever. It’s not a fad. It’s not an industry that shuts down … and any type of economic recovery is going to require the development and consumption of energy. 

Oil and gas has a history with the petrodollar in association with the dollar and other currencies. But it also acts as a hedge against currency, because it’s a commodity like gold. 

Another interesting aspect of oil and gas is it’s not JUST oil and gas. There are many peripheries of the business. 

There are actual businesses that are associated with the industry that aren’t directly oil … so you can make a profit based on the oil business without having the same level of risk.

We’re hardly experts in oil and gas … but we are learning. And that’s why we hang around with smart people who know a lot more than we do. 

One of those people is our guest is Bob Burr, founder of Panther Exploration (PANEX). He has been in the oil business for over 45 years … and he has plenty of expertise to share. 

Opportunities in oil and gas

The first thing to know about oil and gas is that there is certainly an economic benefit. Everyone goes to the pump and sees what happens to oil prices. 

But this time of year there is also a tax benefit. 

We often say that we don’t let the tax tail wag the investment dog … but this niche might be the exception. 

If you invest a dollar in oil and gas, the federal government will let you write off all the intangible cost of that drill. 

“That means if you drill a hole in the ground and it has no value, it’s a hole. They used to make us depreciate the equipment out over seven years and eventually you would write off 100 percent. Now we get to write off the equipment also,” Bob says. 

Bottom line … you’re talking about a 90 or 95 percent write-off against ordinary income the first year, right at the beginning. 

So, how do you get started?

There are really a couple of different ways to invest in oil. The first is exploration … trying to figure out where the oil is. 

Many of these properties are not owned. Instead, they are leased with wells that produce oil. 

Most people looking for the tax write-off don’t want to be involved in exploration … because most of the time you don’t hit oil. 

Instead, they want to be involved in wells that are already producing. Wells produce different amounts of oil each day depending on the location … but some wells have been producing for decades. 

The other option is to find other businesses associated directly with the oil and gas business that makes sense for investors. 

Three years ago, Bob and his team started to look at saltwater disposal wells. 

As wells produce oil, they also produce tremendous amounts of saltwater. You can’t dump saltwater on the surface … it kills everything. 

So, the government requires producers to pump this water back down into the earth at a safe level. 

Bob pays a landowner to lease their land and builds a well to safely pump this saltwater … and other drilling companies pay him to take care of their saltwater waste for them. 

“We’re operating a well now that in the first two years it was in production, it made $4.8 million,” Bob says. 

Bob has also built off of this business by finding a way to clean the water before pumping it … allowing them to separate and remove any leftover oil and “skim extra off the top,” if you will. 

“We’re disposing of 10,000 barrels a day, and if even one percent of that barrel is oil, that oil is ours, and it adds up,” Bob says. 

And the saltwater disposal investment gets the same tax benefit as oil and gas. 

For a niche like Bob’s saltwater well, investors can expect to put in $100,000 per unit. 

They can then … depending on the details of the deal and after consulting a tax professional … write off 90 to 95 percent as ordinary income. 

Syndication is sacred

Oil and gas investment has the potential to be higher risk than other investments … that’s why Bob and his team take their job so seriously. 

“I’m interested in one thing: Making money for us and our partners. That’s why I tell my team that they have a moral responsibility to get serious,” Bob says. 

That is one of the great messages that Bob has shared with us and with other investors at our Secrets of Successful Syndication event. 

Syndication is a sacred thing. You are working with somebody’s hard-earned money. They’re entrusting it to you. 

That’s why an investor who is looking for this type of potential upside in terms of returns, as well as tax benefits, needs to understand and be educated on their prospects. 

To learn more about oil and gas investing, listen in to our full episode. 

More From The Real Estate Guys™…

• Sign up for The Real Estate Guys™ Free Newsletter
• Check out all the great free info in our Special Reports library.
• Don’t miss an episode of The Real Estate Guys™ radio show. Subscribe on iTunes or Android or YouTube!
• Stay connected with The Real Estate Guys™ on Facebook,  and our Feedback page.

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.

---

Love the show?  Tell the world!  When you promote the show, you help us attract more great guests for your listening pleasure!

Podcast: Exploring Huge Tax Benefits and Unique Profit Strategies in Oil and Gas

Mastering Market Trends to Find Late-Cycle Opportunities

They say the best deals go first … so it is too late in the cycle to find great real estate investment opportunities?

We say the answer is no. 

We’re visiting with a multi-market investor who is finding plenty of deals … even this deep into the economic cycle. 

Join us as we push past talk of bubbles and compressed cap rates to uncover deals still up for steals!

In this episode of The Real Estate Guys™ show, hear from:

• Your dealing host, Robert Helms
• His reeling co-host, Russell Gray 
• President of ROI Turn Key Properties, Jared Garfield

---

Listen

---

Subscribe

Broadcasting since 1997 with over 300 episodes on iTunes!

 

 

---

Review

When you give us a positive review on iTunes you help us continue to bring you high caliber guests and attract new listeners. It’s easy and takes just a minute! (Don’t know how? Follow these instructions).

Thanks!

---

The complex market ecosystem

It’s not just important what you invest in … but where. 

Markets are different across the world. So, today we’re going to focus on studying market trends to find excellent real estate investments. 

There is a lot of talk about “the market cycle.” But you see, there’s not just one market cycle. And some market cycles run concurrently. Others lag … and some are completely opposite of others. 

The key is to make decisions on where to invest depending on where you think the puck is going. 

Remember that markets are more than just geography. They also take in demographics. 

Economic cycles affect markets too … and they are affected by the business cycle … the ebb and flow of supply and demand. 

It’s an extremely complex ecosystem. 

Because real estate moves slowly, you don’t day trade. You look out at the horizon and think about the long game. 

There’s also a lot you can learn from other people’s experiences. There are plenty of resources from people who have been through a market downturn or downward cycle before. 

Just don’t forget that in real estate, there is no one great, perfect real estate market. 

The trick is to match a market with your personal investment philosophy … who you are as an investor, what you’re trying to accomplish, your goals and dreams. 

Focusing on a handful of markets can make a lot of sense in the long term. 

Our guest is in a lot of markets and does a lot of thinking and research about this very topic … and he is here to talk about some of the markets he likes for investors today. 

Identifying and adapting to markets

Jared Garfield used to go to his grandfather’s real estate office, drink soda, and talk real estate. 

“From the time when I was a kid, I wanted to be in real estate and follow in the family business,” Jared says. 

But Jared learned from his family’s successes and failures … and what he learned was the power of diversification. 

Jared started buying houses in college. He bought foreclosures and flipped them for modest profits. After graduation, he built up a pretty large real estate portfolio. 

But Jared recognized that markets change. A market that is more cash flow oriented becomes more of an appreciation market over time. Dallas, Texas, is the perfect example. 

So, Jared spends a lot of his time watching that evolution and … to the best degree possible … anticipating it. 

“I developed a spreadsheet that analyzes 278 metropolitan statistical areas across the entire country on about 80 different metrics,” Jared says. 

Jared incorporated everything from poverty level to crime to test scores to media to affordability … and he looked at appreciation, building permits, job growth, population and more. 

“With that, we’ve identified some markets where you can really outperform many of the other markets,” Jared says. 

Jared also says it is important to think about submarkets. Investors tend to be the first in when there is an opportunity and the first to leave. 

So, Jared likes to look at secondary and tertiary markets. Take Huntsville, Alabama, for example. 

Huntsville is known as the Pentagon of the South. It’s home to NASA, Boeing, Lockheed, and Raytheon, and the FBI just moved 4,500 jobs from Langley to Huntsville. 

Jared bought foreclosed houses in C or C+ neighborhoods for $28,000 to $35,000. They put in an average of $30,000 into rehab. Five years later, those homes are selling for about $120,000. 

The cash flow is really good. 

But, Jared says, you have to deploy different strategies at different phases of the cycle. 

Now that Huntsville is no longer an absorption project … it’s expansion, full tilt … there is no reason to buy turnkey in C class neighborhoods. Instead, it makes more sense to buy new construction. 

“A market gives you what the market gives you, and you have to decide how to take that and turn it into something that makes sense,” Jared says. 

Selecting the right market for you

There’s a lot to learn about selecting and profiting in high cash flow markets … that’s why Jared has prepared a special report for our listeners. 

In this report, Jared shares how to choose markets … the metrics you should use and how to understand the difference between high cash flow markets and others. 

Jared also shares what things you should watch for in each of his top market picks. 

One of those big factors is the one-horse town. 

A one-horse town doesn’t mean small. It could also mean a big town with a very segmented workforce. 

Seattle took a bath when Boeing laid-off workers in 1990. Houston had it rough because it used to be pretty much just oil. You’ve got to have a diversity of employment and industries. 

“I like to invest in towns that are at least 300,000 in population and have a variety of employment sectors,” Jared says. 

With single-family investing, all the data is there for you to pick the right market and get high returns … you just have to know how to look. 

For more tips and experiences from Jared, listen in to the full episode!

More From The Real Estate Guys™…

• Sign up for The Real Estate Guys™ Free Newsletter
• Check out all the great free info in our Special Reports library.
• Don’t miss an episode of The Real Estate Guys™ radio show. Subscribe on iTunes or Android or YouTube!
• Stay connected with The Real Estate Guys™ on Facebook,  and our Feedback page.

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.

---

Love the show?  Tell the world!  When you promote the show, you help us attract more great guests for your listening pleasure!

Podcast: Mastering Market Trends to Find Late-Cycle Opportunities

Podcast: Clues in the News – The Fed, the Repo Market, and Real Estate Investing

Podcast: Short Term Rentals for Long Term Profits

Podcast: Ask The Guys – Recession Preparation, Note Investing, Gold Strategies

Podcast: Investing Where Real Estate, Healthcare and Demographics Converge

Podcast: Getting to the Next Level with Your Real Estate Investing

Podcast: Clues in the News – Stocks, Negative Rates, Oil, Gold and You

Next Page »