I have this question because I have played in the NFL for 6 years now, and I have had many of my teammates ask me how they should invest some of their money once they find out that own multiple properties. Many of these guys are coming straight out of college and have never had this kind of money before. The average NFL career is only 3 years so these guys know they won’t be making this kind of money forever, and many of them want to invest and get into real estate but never know where to start.
So I wanted to ask all of you, If you were 22 years old with all the knowledge you have now (assuming you already have a home of your own at this point as well) and had 250k in the bank that you are willing to invest, how would you invest it?
I know everyone has different niches. Some of you invest commercial properties and triple net leases, some multi family properties, and some SFRs.
So I would really like to see, what do you all think these young men should do with this money that they are making for only a short period of time, to create it into long term wealth in the future?
Dear Sir may I address you as My Son:
Many people who win the lottery lose it in three years. Investing is not easy, fun, or fast. Do not give your money to someone else. Today residential is overpriced, emotional, and competitive.
Buy for LOCATION. The best location, because that's one thing you cannot fix.
What are your strengths and skills? Are you handy and can fix things? Are you good at checking the numbers and making sense of costs? What do you need to learn?
Your tenant is a vital part of your asset, think of them as holding your cash.
Split the money into three bags. Two to invest in two properties, one to save long term. Make sure your credit is good, or get help fixing it before you start it's a part of the costs.
Ask for help, people want to be good.
Hey @Trevor Davis great question!
Caroline has some great points! I would agree you can’t trust people with your money and the best way to invest is in your self so you got to play to your strong suit.
My answer would be which￼ vehicle (multi family, syndication, single family, stocks or a business you have always wanted to start) gets you excited and that’s what you should invest into!
Great question! Go Cardinals!￼
I'll keep it simple . . . I like (for almost 20 yr) good, quality SFHs in various US metro's suburbs.
This in my opinion is a long game and requires patience BUT a relatively simple one to evaluate, handle, manage, liquidates, finance, etc.
I like boring ones for example a SFH in the suburbs of Nashville or Kansas City, 3/2.5/1750/ 2000 built, good schools rented to a family w/ 2 kids and a dog . . . .truly the American Dream.
I'm staying away from older, smaller in sketchy parts of town that on paper are cash cows but in reality . . . not.
To me boring real estate means you can live in LA, own one or more in KC, use a good property manager (not all are bad/jerks/crocks) rent out, still experience typical and minimal rental/house issues (yes, you will have them I promise) but at least encounter them less frequent.
Couple of things to know about this type of investing:
- relatively low risk
- relatively for real estate a more liquid asset
- once you buy and see how it works and build some confidence - easy to duplicate
- doesn't require extensive experience
- if done correctly can be done in the background of your life, ie you don't need to be actively present on a daily/weekly basis.
Please know this:
~22 yr old that is starting in RE - WOW, amazing. Real estate LOVES time and at 22 . . . . OMG!
Tell your friends that the best thing that can happen to them is that after 6 mo - a year of seeing how it works it alters the way one thinks about $$$ and re-align one's financial mindset and priorities. All from investing.
1) Get your tax situation in order if it isn't already. Get a CPA specializing in clients with your background and make sure that is all taken care of.
2) Figure out what your long term goal is. What do you want to do after you're out of the NFL?
3) Make a ton of connections within the league. Talk with as many of the players who have done huge things as you can. For example, Drew Brees earned a heck of a lot more than $250k, but he also focused on investing his money and has built a fantastic portfolio.
4) Look for relatively passive investing strategies that can fit with your current schedule and teach you more about the business. Always focus on the people first - their reputation, their experience, etc. Don't get pulled in by the promise of a huge return. Dani mentioned turnkeys, I would put syndications and notes on that list to look into first as well.
The best investments you can make now are in reading books and connections. Start with the Biggerpockets books, they're all written by highly experienced investors.
Wow, 22. That is amazing that you're thinking about real estate already. I can't even imagine what I was doing at that age, but I wished someone introduced to me to investing at such a young age. Good luck, and just do it now. You'll be glad you did - 10, 20, 30 years from now.
@Trevor Davis When I was 21 I had $150,000 in the bank and paid all cash for a rental property because I didn’t know anything about RE investing.
It’s not that it was a bad investment, it’s just that I could have leveraged my money for much more.
Last year I sold that property, took 100k and used a combination of owner financing and a commercial blanket loan to purchase a portfolio of 14 units - tripling my cash flow in the process. Rent roll is currently $14,000 per month.
The mixture of owner financing and an asset based commercial loan worked great for me.
@Trevor Davis Identify those who have the desire for long term wealth and focus on them. Read and discuss Rich Dad Poor Dad w them. Share your experience w your numbers. Walk with them through base hit deals. As you Train up others and walk alongside them in their RE journeys you may find over time that you’ve developed a RE/wealth building business for professional athletes. Leverage your unique experiences to build a niche business whose “big why” is changing the financial game for former pro athletes. Start now by building success stories.
My husband and I do this with nonprofit workers in LA. It’s a blast. We’re motivated to see more with these callings financially freed up to focus on their work. As an aside, this also motivates us personally to keep building wealth so that we can continue to be helpful to those we’re coaching.
When I was 22, I would likely have gone into house flipping or 'rehab to rent' properties because I was more active and grew up remodeling houses. There are alternatives to actively getting involved such as private lending. I am not suggesting this is the best way or easiest way, but there are many different ways to make good returns in real estate. You don't have to buy an asset to make money. You could invest the asset you already have (cash) into other people's projects that are good at what they do and have a proven track record. Invest in one project or a mixture of multiple projects. Others stated above, don't give your money to anyone else. I agree with this other than I would add...without doing your homework with someone who knows how to properly vet a potential candidate. There are good, honest, solid investors that need short term funds to complete their projects. They may only need $15K or they may need $250K and any amount in between and they are willing to pay decent returns for using your money for a relatively short period of time. They may need the loan for 3 months, 6 months or 9 -12 months. The key to this type of investing (and many others) is relationship building. Once you have success with a couple small projects loaning to another investor, you may find it very rewarding to continue with them and they will likely refer you to other investors in their networks. Private money lending is not risk free, but investing of any kind has it's own type of risks. There are some key things to learn before jumping into this arena, so please feel free to reach out to me if you are interested in learning more.
@Trevor Davis I’m a 26 year old investor, so I may be able to relate to these guys on a personal level.
My best advice to anyone just starting, is to start. Go **** up. Investing that much money is scary to us, and I would say you don’t need 250k to start.
I started flipping houses 3 years ago, I purchased my 1st house for 21k and ended up going way over budget and spending almost 80k in renovations (hard money payments, water bills, electric bills etc) and still sold the property for 130k .
After closing cost we got a check for around 120k and I had to split the profit because I didn’t have any money in the deal .... but so what, I gained knowledge and still walked away with some money.
After doing 10+ flips, I’m in a position to buy rentals, however it’s a crazy market right now so until I find a solid location for a solid priced rental, I’m going to continue to flip homes.
Once your in the game the market tells you what to do. You didn’t make it straight to the league though, right ? You had to go threw pop Warner, then you had to be that high school all American and then the collage stand out, and after all of that your name got called.
Find your entry point, you mite have played quarterback when you were younger but found out along the way you were a receiver, but you wouldn’t have understood that if you never played . It’s the same thing you may start out wanting to flip houses but you may be the type of person that loves commercial buildings.
@Trevor Davis , I would invest half in a proven mutual fund. Take the remainder as a down payment to Buy one, brand new David Weekly or K Hovanian home in Dallas area, lease it for two years, in two years sell the appreciated property or keep leasing if you want. If you don’t want to lease, live there and enjoy your life.
Trevor, I represented a good number of professional athlete in the San Francisco and Bay Area, as a RE Broker. It became my niche. As you have already discussed, saving and preparing for that last day on the field is absolutely critical. Congratulations for being aware of this.
Having said this, it's extremely important to find an Agent/Broker/Property Manager/Mentor who will have your/their best interests front and center.
Given your profession, it's not ideal for an athlete to focus on real estate and the daily tasks, during an athletic career. You shouldn't have to. Your job is to remain fit, physically and mentally, and to avoid those things that can decay the years of hard work you've put into your sport.
Therefore, if one can, trying to avoid self-managing of property during one's time as professional athlete is key. But, there should also be learning that takes place, during this time, and this is why it's important to surround yourself with those who truly understand the dynamics of what you just explained.
There are those who do. Find them and do not work with someone you do not fully trust.
Insofar as where to put your money, it doesn't really matter, to be honest. As long as you're making money consistently and the investment is not overly risky for the individual, it's hard to to say one real estate asset is better than the other. Every situation is too unique to comment on this.
Overall, having been in the game for 6 years, you're obviously looked at as a leader by the younger guys, it's fantastic to see that they've a resource in you that will serve them well.
-Find good people who are not only looking to make money off of your success. You want to find someone you can work with for some years, ideally.
-Invest the income in something. If real estate is your/their thing, great. SFRs, MF, Commercial, whatever. Just put that money to work and modify as the situation requires.
-Continue to pound home the following message: "you can buy one Ferrari now or you can invest the cash and buy 20 Ferraris in 25 years." This is THE way to look at things and it's especially crucial for athletes who will likely have a limited number of years on the field.
Best of luck,
Responsible (meaning no more than 75-80%) leverage.
Don’t shop for team members on Instagram.
Take advice from people who have actually accomplished what you want to, not people who are focussing on pretending to. Example: investing in a large scale commercial development fund with someone who has bought 5 or 6 sfh properties worth $75k but has 100k+ Instagram followers is ridiculously unwise.
And most of all, don’t advertise your wallet to the internet under any circumstances. Your inbox has likely been destroyed already by “opportunities” from people who don’t know a damn thing about you. This business is full of wantrapreneurs. And it’s also full of shady characters. Be careful.
Given your position, I would invest in long term rentals with enough cash flow to be managed by property management companies and be completely hands off. I'd focus on building a team and using them to generate me cash flow. Buy several properties to cover your expenses. After you earn more income and have studied more and have left the NFL I would then focus on larger deals and sell off the smaller properties in your portfolio.
@Trevor Davis If I had that kind of money coming in but knew I didnt have the time to invest along with it (since they are playing full time in the NFL) I would do one of two thing.
1 - Buy several longer term rentals that could cash-flor decently enough to pay for themselves, pay for repairs, pay for the management company and still pull in a couple hundred dollars per door per month. This would help hedge against inflation and would be a better return than sitting in the bank. Maybe less money than the stock market but way less risk. After the career is done (be that 3 or 13 years) then I would look to cash out. There are plenty of ways you can cash out and minimize taxes too on the capital gains. Just between the appreciation of property values and inflation over the years you would have probably you best bet at having a safe a very good return on your money.
There is always the option of keeping some and selling others to further expand the rental portfolio. This just take more time on their end. So this allows for a lot of options on how involved they want to be just depending on what their schedule and time commitment can be.
2 - Buy raw land wherever you can find it. This is by far the simplest option, the safest option and the option with the most possibilities at the end. This is also the option that gets you the least (and could be zero) cash-flow option. This raw land could be in-fill lots in a big city. It could be corn fields in farm country. It could be single lots in a subdivision. Could be forests out in the mountains. Grass lands for cattle grazing. There are very few raw land options that are a total waste of money. Obviously there are some, so you cant just buy blindly, but rarely does land lose value and rarely is there no potential for it in the future.
If you buy empty fields, you can lease to farmers for some cash-flow. Then, depending on location, could be turned into sub-division developments in the future. And some cases stay agriculture and become very lucrative. Just look at how much farmland Bill Gates owns... You can my lots in a subdivision or in-fills in the city. Sit on them and wait for the appreciation return after a while or build and sell. Forests are great for lumber harvests. This would allow for potential cash-flow or a one time buy-out of the lumber. At the end you still keep the land and then sell it for a nice return after the harvest. Or develop the land too.
Option 2 is my personal favorite as raw land gives you so many options and is a great way to keep your investment up with at least inflation if not above. Especially for someone that can wait a couple years to see a return. Be that money is not an issue and they dont need the cash-flow or they dont have the time or desire to stay actively involved in making sure the investment turn a profit the entire time its being held. There will always be a need fore more land (its the only thing we cant make more of). And buying cheap land that doesnt make a good return now but will in 5-10 years once the city has pushed out to where you purchased is always a good long term strategy. Maybe its just the architect in me that likes the options and potential for designing and creating so many things but I just like raw land for long term holds. Its definitely not the get rich quick road but the the road thats almost guaranteed to get you to a safe place at the end of it.
@Trevor Davis multifamily to start with. Possibly buying some performing notes. Read Rich Dad Poor Dad. It describes starting small buying multifamily property then selling after a few years, doing a 1031 exchange to buy a larger one...and repeat the cycle. Assuming Biden doesn't kill the 1031 exchange of course.
@Taylor L. Agree for sure on consulting with a CPA. I’m about to do that too!!
@Que Tran me too!!!!🤣
If they avoid the landmines of babes, bling , blow and cars they're doing good.
Next I'd put half my after tax earnings in no load index funds,
Be a landlord later if they want to. Steep learning curve. I can just see the yawns as their eyes glaze over now. Baby steps.
Easy. Buy an awesome fourplex. Live in one unit, rent out the other three. Also rent out your empty bedrooms in your unit. Get your license and keep building momentum!
Just like you spend a lot of time practicing on the field and in the gym and watching film, spend some time learning investing and personal finance principals. In your situation you have to also be careful of people taking advantage of you. Get to know other investors in your network. Invest when you are ready. You can also invest in the stock market but keep it simple like an sp500 or total stock market index fund until you are ready to purchase a property or partner with a group of other investors. Good luck in both the NFL and investing.
You can't do much with $250K in the markets I prefer, but if I had $250K to invest in real estate and I was 22 I would do the followings:
1. Buy 1 SFR cash in cities like Huntsville or Gainesville or any city with a good university and growing population.
2. Pool my money with other investors (or NFL players) and buy a bigger project in cash or with a big down payment so the property would cash flow.
Then repeat after I sign a new contract. So hopefully after you play for 10 years you have at least 10 paid up rental properties collecting $20K/ month.
The reason I don't like getting a mortgage because I remember when I was 22 years old playing tennis I was traveling all over the world and had no time to think about applying for mortgages. At 22 I wanted to focus on my tennis career and just experiencing life in general. I also don't want to worry about the market going up or down.
With both of my options the key is to find a good broker. The broker can make or break you, so choose wisely. If you find a good broker it's as good as finding a good wife LOL.
Because a career in the NFL can be short term and come to a sudden end due to injuries, I would advise investing as much as possible as quickly as possible. I would advise the following process:
1) Live frugally (living on 50% of income) and putting the other 50% of earned income into cash flowing investments. I’d focus on bigger deals, like apartments.
2) Repeat step 1 until your income from cash flowing investments is equal to your living expenses.
3) Once your passive income pays for your existing lifestyle, live only on your passive income and allow your active income to buy more cash flow.
4) As your cash flow begins to increase from passive investments, your lifestyle increases.
Honestly, this is the same process that I, and many other investors, follow. The only difference is how much income your active investments are bringing in.
The only other thing I would advise is that because your active income brings so in so much, I wouldn't think it would be valuable to your time to be concerned with buying value add investments or BRRRR strategy investments. They just take a lot of time, stress and a huge learning curve. Things that would take the least amount of time would be (in order of least time needed to most) dividend stocks, limited partner in syndicated deals and buying stabilized cash flowing property. This is not all inclusive, but just a few examples.
Once you're/they're out of the NFL and have more time to spend on researching investments and improving them, you could start venturing into buying junk properties, adding value, stabilizing them and creating more wealth and cash flow. You could do those through single family BRRRR homes, distressed multifamily and/or buying businesses that need improvement.
There are so many ways to invest and make money in this world, I hope this helps you and your teammates. Y’all truly have the opportunity of a lifetime to build generational wealth for your families. Good luck and feel free
IMO the absolute best way to invest 250K is to:
Step 1: Put 80% in safe inflation hedged assets.
Step 2: Put 5% into a high risk high reward high conviction bet.
Step 3: After getting a 10x or 20x return on your high risk high reward high conviction bet, go to step 1.
What is the hardest thing with investing this way? Finding a proper high risk high reward high conviction bet, and being patient, and managing your risk. These are things that you learn through experience and taking losses that hurt.
WARNING: When I say "bet," I dont mean go to a casino. You want to place bets where the odds are in your favor.
DISCLAIMER: Youll go broke listening to me; do your own research; Im not responsible for anything; I am not your financial advisor.
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