Did you know that there are many parallels between investing in oil and gas and real estate syndications?
Grant Norwood is CEO of Norwood Energy Corp, an oil and gas exploration company out of Southlake, Texas.
Grant’s specialty is recognizing opportunity hotspots in undiscovered areas of the country where his team can operate significantly below the costs of oil giants like Exxon or Chevron.
On this episode of Financial Freedom with Real Estate Investing, Grant joins Garrett to discuss the two kinds of deals Norwood Energy does, investing in new wells or distressed assets.
Grant shares what he does to find off-market deals on wells and walks us through the tax advantages of investing in oil and gas assets.
Listen in for Grant’s insight on financing oil and gas deals and learn the similarities between investing in energy and multifamily syndications.
Key Takeaways
How Grant got involved in the oil and gas industry
- Connected with series of mentors
- Land & title, acquisitions and operations
The two kinds of deals Norwood Energy Corp. does
- Find distressed assets in need of capital
- Drill wells from scratch
What Grant does to find off-market deals
- Get in trenches to check on own wells
- Approached by owners in area
The benefit of self-managing your own wells
- Interests aligned with investors
- Cut expenses where possible
The tax benefits of investing passively in oil wells
- Pay taxes on 85% of cashflow
- Write off intangible expenses
- Bonus depreciation on tangible equipment
What Grant looks for in an oil and gas deal
- Return initial investment in 12 – 18 months
- 4 or more years of productive lifespan
How oil and gas investing differs from real estate
- High cashflow right away
- Value of well decreases over time
How quickly Grant’s investors grow their wealth
- Initial investment back in 2 years
- Double money in another 2.5 years
- Double again every 5 or 6 years after that
Why Grant prefers NOT to finance through a bank
- Don’t have to worry about debt service
- Only available for large acquisition deals
How much to set aside for capital improvements
- Ranges based on depth of well
- Few thousand to several hundred thousand
How rising oil prices impact Grant’s business
- Creates delays, must pay more for services
- Good for bottom line
Related Articles
Accelerated Depreciation in Real Estate
The Potential Returns of Multifamily Real Estate
What Makes Buying a Foreclosed Property Risky
Connect with Grant Norwood
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Resources
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Learn More About Michael’s Mentoring Program
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Financial Freedom with Real Estate Investing by Michael Blank