Finally having finished rounding up nearly $200,000 for the 17 oil well project yesterday we sent off the check to the operator. Together with 28 other investors, we managed to snag a 12.5% ownership in the entire project. Now I can get some rest!!! [Although now I have to sign all the paperwork and mail it back to the individual investors]
One of the advantages of owning a large chunk of a project is that you get to bug the operator a lot more than if you owned say 1%. [The same is true for real estate. Do you think your property manager is more likely to take your calls if he manges 12 of your homes instead of just 1??] People will tolerate a lot more crap if you provide them with a substantial amount of business.
So rather than me owning 0.72% of the project and having absolutely no leverage, I control 12.5% of the project thus making myself cozy with the operator. I’m also the manager of the LLC and will be getting a performance fee if we make more than a 20% return in any given year.
Ahh…leverage! It works in all aspects of life, especially the financial arena!