Troy Eckard on Direct Ownership, Mineral Rights, and Real Investor Control

Troy W. Eckard (00:00)
No one cares how much your net worth is. No one. Because when you die and they bury you in that cemetery,

The epitaph on your tombstone is not going say, here lies Troy W. Eckard’s $7.225 million net worth. Nobody cares. What people need to do is stop worrying about how to make the next dollar. They need to figure out how to make the next moment better. So how do you do that? You invest in things that don’t absorb your time. You invest in assets that don’t take undue risk.

Scott Bursey (01:58)
Welcome back to the Real Estate Pros podcast. Today we’ve got a real estate expert with us, Troy Eckard of Eckard Enterprises. Troy specializes in high investment strategies and real estate enterprise management. Welcome to the show, Troy.

Troy W. Eckard (02:12)
Hey, thanks for having me. I appreciate you let me on.

Scott Bursey (02:14)
Absolutely, it’s a pleasure to have you here. Troy, before we dive into the market dynamics, please give our audience the quick version of your journey. How did you first get into real estate?

Troy W. Eckard (02:24)
Yeah.

Well, let’s be clear. The real estate I’m in is not the real estate most of your listeners are thinking about. My real estate is under the ground, not on top. And ⁓ for me, it was a very ⁓ unique journey. I was introduced to the oil and gas industry as a result of a ⁓ typical problem. The United States is going through the oil embargo in the seventies. There’s high taxes and the combination of shortage of oil and

Tax-driven incentives for investors, it became a perfect market for somebody that wanted to introduce high net worth investors to what opportunities in real estate, but it was evolving oil and gas real estate like mineral rights and drilling wells.

Scott Bursey (02:59)
Thank you for that. So Troy, you’ve spent over 35 years navigating the energy and alternative investment space. You often talk about the difference between owning a piece of paper and owning the underlying asset. For our listeners who are used to Wall Street products, why is direct ownership the hill you’re willing to die on?

Troy W. Eckard (03:21)
Yeah, the way I look at it, so I owned an investment firm for about 22 years and I had all the Wall Street guys ask me to sell their product and I saw pretty much every way imaginable. You could create a structured vehicle like a limited partnership LLC, a company. But when you look through the documents, the documents themselves were able to mask or hide enormous fees, massive markups, poor management decisions, lack of control. And so at the end of the day, the investor

who thought they owned an apartment, thought they owned a self store, thought they owned a drilling venture. They really owned a piece of paper that had corporate governance in such a way you had no control, no way to remove the sponsor or even hold them responsible for bad acts. So it’s kind of one of those things where you make an investment inside of an SPV or special purpose vehicle and you find yourself, you’re only as strong as the weakest participant. So for me, 25 years ago, basically coming off the heels of the 2008 financial crisis,

We saw hundreds of orphaned partnerships, orphaned LLCs, orphaned entities where the sponsor said, there’s no juice left in the lemon, so they abandoned it. And they left it to all the investors to figure it out. I looked at that and said, this is not the way it was meant to be. So what I want to do is I want to cut out the middle confusion, allow investors to invest in real estate, oil and gas, mineral rights, or working with me, own it directly. I dropped dead in the parking lot this afternoon. They have a deed and title that says it’s theirs.

It’s just a matter of who’s the manager that facilitates the back office, paperwork, accounting, and revenue. And by doing that, it gives them a greater advantage in not only when they own it, they cashflow it, but if they ever want to sell it, they can do it through 1031 exchanges, they can do it through self-directed IRA. So it becomes a much more real piece of real estate than being caught up in some kind of a partnership or LLC. So 40 years of experience, because this is my 41st year, has led me to the conclusion this is the best way to do it.

Scott Bursey (05:55)
That’s a wake-up call for a lot of people. Curious what is the core strength that sets your approach apart from investors right now?

Troy W. Eckard (06:04)
I think the main thing for me is that when I look at investing in other people’s projects, which I’ve done over 40 years and people come to me, I find virtually no one is willing to put their own money in first. So like when we offer mineral portfolios, my company owns those minerals and bought and paid for them before we ever invite our clients. And the reason we do that is we only buy what’s good enough with us. If the investors stopped investing today, we own it. So I want to own the very best. And we’re willing to maintain 20, 30, 50 % of whatever we buy. So we eat what we cook.

That’s unheard of in investment. Somebody wants you to buy an apartment complex. They put up a hundred thousand for deposit. They want you to fund the other 20 million. They get a carry fees and management. They have no risk. So if they make a mistake, there’s no harm, no foul. They take no skin off. I’m a true entrepreneur at heart. So I started investing as early as 20. And the way I believe is if I’m going to ask you to follow me, trust me, believe what I’m doing, then I should have my money involved side by side with you. I’ve had public company CFOs. I’ve got billionaires that have invested in all of them had the same character, which is

I’m willing to assess the risk and I’m willing to absorb the risk and follow your lead, but you got to lead. And so I started out 30 years ago, putting my own money in. So generally speaking, in almost every venture that I have offered to my clients, I’m usually the largest or one of the largest owners in every single venture and usually ahead of everybody else. That’s what sets me apart.

Scott Bursey (07:17)
That’s

and it certainly does absolutely and that is powerful Troy. What’s the current business weakness or challenge that perhaps you’re trying to figure out or improve on let’s put it that way.

Troy W. Eckard (07:31)
I would call it, no offense to your listeners, but what I’ve determined after 40 plus years of business is 75 % of most accredited investors with a net worth over a million dollars, if they had to get a grade for investment acumen, they’d have a D minus. And the D minus is mostly relative to lack of effort. They spend more time thinking about their yield that they might get instead of running the due diligence and understanding the asset class they’re invested in. So the most difficult thing we have

is investors who want to invest money, which is great, but they treat it like it’s monopoly money and they treat it like ⁓ it’s just a playground. And so when they get involved in investments that go bad or rye, or even when they go good, they don’t really understand why it’s bad or good. They just know I either won or I lost. Well, that’s more like going to Vegas and gambling. What you really want is you want a more sophisticated level of investor who says, I want to choose the asset class and I want to choose the sponsors in that asset class that will delineate

success from average or norm because I only want the top 10 % of each asset class. How do I do that? I got to learn. I got to be educated. I got to want to have a hunger for knowledge about what I want to put my money in greater than my laziness of just throwing money against the wall. I don’t find that. I find over 75 % of most credit investors are just absolutely lazy. ⁓ They are finger pointers and what they really want to do is have somebody baby them and then when it goes right, they’re the hero when it goes wrong at somebody else’s fault. It’s the way the market has been the last 20 years.

Scott Bursey (08:57)
appreciate the honesty there. Where do you see the biggest market opportunity right now?

Troy W. Eckard (09:02)
If I sat back and I had a billion dollars to invest right now, I’d probably be looking at ⁓ me raw land in major cities. And I would be running the raw land in major cities, and I would be developing raw land lots for construction for new homes that I would not expect to have sold for four to five years because I believe that the land or the dirt part of traditional real estate has stopped. You see all half built developments even in Dallas. And what you’re finding is land costs have gone up 4X.

cost to develop it is probably one for one par against the actual cost of land. But when you look at inventory for builders, when you catch the next wind in your sails of a big residential real estate boom, there will be no lots. So from a pure contrarian point of view, I see that as something that would be a very good asset. The other thing I see is in traditional real estate is I’d be buying any lot that’s directly associated to mountains or water because quite frankly, there’s no more of it.

Don’t care what you think the price is today. It’s going to double, triple, quadruple.

From an alternative asset class, I look at oil and gas because oil and gas has the same thing. There’s only so many oil and gas deposits in the US. They’re on very specific geographical pieces of land. The oil companies have historic record production, but it is very finite. So whatever mineral rights I buy, whatever leasehold I own in those core areas, there’s no more ever going to be made of it. And if I buy it and I can cash flow it, I own an asset no one else can chase. So that’s what I do with my own. I do raw land.

water mountains and oil and gas. That’s what I do.

Scott Bursey (11:02)
That is great perspective and thank you for sharing that. What major market risk or threat are you watching? Yeah, kind of closely right now.

Troy W. Eckard (11:12)
It’s all political. So oil and gas for the last 20 years has been the football for each president that’s come into office in different policies. And so for me, as I may have mentioned to you earlier, that for me, I’m looking at a two presidential cycle investment. Everybody goes, what the heck does that mean? I said, I got to get past two presidents because every four years it’s 180 degree different. One president says we don’t like fossil fuel and his policies were anti-capitalization toward oil and gas.

caused the oil to go to $90 to $129 a barrel. I made a lot of money. It was great for my clients. But it was anti-productive to the economy, which sent us into hyperinflation. And that inflation caused consumers to consume less and put us in a precarious position when it comes to rates and et cetera. The other flip of that, which is President Trump comes in and says, I want cheap oil because I want to grow the economy. But he puts the oil and gas industry in a position saying, we can’t make money at $60 oil. So now you have a real supply chain problem. That was before the Iranian.

So what I’m saying is when you have two different political views and they can switch every four years dramatically and now this damn executive order means you bypass Congress, the problem I have is that it’s massive uncertainty with a four-year window. This is a 10-year to 20-year asset. So I’ve got to make financial decisions based on at least eight-plus years’ worth of political overturn to make sure that we don’t catch ourselves in a negative political environment that’s anti what I do for investing.

Scott Bursey (12:31)
very critical point and that illustrates your vision, the long game if you will. Can you briefly describe your current investor network or peer group that you’re a part of or may lead?

Troy W. Eckard (12:36)
Right. Correct.

⁓ So I don’t join any peer groups and I don’t lead any. What I lead is I lead 3,200 millionaires that are my investing partners, 4,600 accounts. We’ve done about 1.3 billion in business the last six years and we’re sending out about 10 million a month in revenue. So my peer group really is my partners who are engineers, lawyers, doctors, bankers, investment advisors, professional oil and gas experts, doctors, dentists, the whole nine yards. So my peer group is entrepreneurs.

And I don’t need to join groups because within my group, which we have multiple meetings throughout a year, I’m exposed to 3,000 entrepreneurs in almost every asset class of occupation or profession. And through that collective aggregation, it’s like sending a scout to the front line in a war. He knows what’s in the trenches. He knows what’s going on because you’re getting reconnaissance from Alaska to Orlando. I’ll travel 8,500 miles in three days doing seven presentations from Alaska to Orlando. I know from coast to coast what bank rates are.

what mortgage is like, what the market’s like, what construction’s like, and I’ve done that in 72 hours based on flying around the country. So that is my peer group, is active, contrarian, accredited, wealthy investors that are self-driven entrepreneurs. That is my peer.

Scott Bursey (13:52)
outstanding. What’s one piece of advice that or story or something that you’d like to illustrate for our audience here today?

Troy W. Eckard (14:42)
Here’s the advice. The advice is, and I’ve been kind of funny about this lately, but I’m 61, so I’ve lost a lot of friends in high school. I had a buddy die the other day of a heart attack. He was 60, et cetera. So you start to put the reality of your travel or your journey through life in perspective. And here’s what I tell the advice to your audience.

No one cares how much your net worth is. No one. Because when you die and they bury you in that cemetery,

The epitaph on your tombstone is not going say, here lies Troy W. Eckard’s $7.225 million net worth. Nobody cares. What people need to do is stop worrying about how to make the next dollar. They need to figure out how to make the next moment better. So how do you do that? You invest in things that don’t absorb your time. You invest in assets that don’t take undue risk.

You determine for yourself. I’ll give you a simple example. Let’s say somebody has a $5 million net worth, and they need $100,000 to live on.

And they’re stressing because the banks are only paying four and a quarter. And I can’t make the money. I can’t make the hundred thousand. I can’t make fixed income. I’m making only this much money a year. You know what I say? I say, but you got a better plan than that. And they go, what’s that? Take a hundred thousand dollars a year out of your five million dollars. got 50 years worth of money because nobody cares what money’s left. You don’t owe it to your kids. You don’t owe it to your family, your heirs. What you owe is the appreciation and value you created from the money you’ve accumulated.

and you’re only managing it so you can have the best life you can have. And if whatever’s left you give your kids is great. But I tried very diligently the last four or five years to get my rich investors to understand you don’t need to have a certain network to feel like you’ve succeeded. And the last thing I’ll tell you, I do this to my audience all the time. say, your hand, 100, 200 people in raise your hand if you have a car that’s less than 12 months old, maybe one or two hands go up. How many of you drive cars that are five years or older? Two thirds of the room’s hand go up. And I say,

And what are you trying to prove? You’re a hero. Your kids, when you die, are going to wait for the trust to be probated, probate, probate their trust. And then what they’re going to do, they’re going to buy a brand new car, a lake house, and travel the world on your money. You’re not a hero. You’re not practical about why you accumulated the money in the first place. Unless you plan on being Elon Musk, nobody gives a damn about second place. And that’s a fact.

Scott Bursey (16:42)
And that gives us great content, but we’re not gonna let you go quite yet. To wrap up our discussion, based on all the strengths, opportunities, and threats we’ve ⁓ analyzed today, what is the one non-negotiable action, the single biggest priority that every real estate investor should implement in their business tomorrow?

Troy W. Eckard (17:04)
I think you need to have some truth serum. So if you ask somebody today, how does your portfolio look? I’m good. I’m worth $6 million. I got real estate, rent houses, flip house, got a few oil and gas, mineral rights, everything looks good. All right. Let’s say tomorrow you have a terminal cancer and you must, you must liquidate everything you own. What would it look like? well that take forever to sell that lot. And I own that. that house was a piece of junk. I’d have to fix it up. No, no. You have one week to live. What would the liquidated value of your net worth be?

That $6 million probably be more like 3.2. By the time I pay the taxes, by the time I get the discount, by time I get rid of it. So the true serum that I tell people is, don’t blow smoke up your own skirt. Sit down look at your portfolio and say, I got a three-legged horse over here. This partnership is not working. This asset’s terrible. I’m losing my money. You’re better off taking that tumor, that bad investment, and cutting it, cut your loss. And one, it does two things. It eliminates the headache and the drain of maybe financial loss. The second thing is, psychologically, it gives you a chance to build back a better net worth.

by shooting that three legged horse. And I find the preponderance of my clientele, 3000 plus millionaires, the preponderance is too many hang on to bad assets, bad relationships, and things that are not gonna be beneficial, positive going forward. So I say, take the truth serum, look at it as if you didn’t own it and say, what is truly worth what and what do I keep, what do I get rid of? I’ve had so many that have done that and taken the truth serum, they now look at and go, it’s clear. I wasn’t worth six, I was worth 3.4, I’m still happy, I’m doing good.

But now I can focus on building a true additional $3 million net worth to reach the $6 million that is actually part of the true CERN result. It’s kind of quite a revelation to do that to your own portfolio.

Scott Bursey (18:36)
That’s an incredibly valuable takeaway Troy. Thank you for sharing your deep expertise with the Real Estate Pros community. We appreciate you. For our listeners who want to follow your work, connect with you, or learn more about your insights, what’s the best way for them to reach you?

Troy W. Eckard (18:45)
Yeah, I appreciate it. Thanks for having me on.

Well, the best thing you can do is go on Eckardenterprises.com and inside Eckardenterprises.com is our app. It’s called Eckard Insights. You sign up, you don’t have to tell us if you’re credit or not. You can get, it’s just hundreds of hours of educational videos and commentary. I do a podcast called Talk with the Texan: Money and Life. And I spend hundreds of hours teaching you due diligence. I teach you how to evaluate investments. I teach you how to avoid Ponzi schemes. See, I want to make investors as smart as they can be.

Because the smarter investors become, the less crooks in the business. And that is really what my goal is. I want the smartest investors out there, and the crooks will find themselves lonely and broke, and they go away over time. So that is what I would say is kind of what I would hope for, is that each person might go to our site, tag into Eckard Insights, and start learning about oil and gas, even if you never invest. It’s going to teach you the importance of oil and gas as it relates to all your other investments, because they’re directly correlated.

Scott Bursey (19:48)
Educate yourself. Thank you for that. And thank you for being on the show.

Troy W. Eckard (19:54)
Yes, sir.

Scott Bursey (19:54)
And thank you to all of our listeners for tuning in. If you found value in today’s episode, please make sure you’re subscribed. Until next time, keep your standards high and your vision clear. We’ll see you in the next episode, everyone.