By Stefanos Gregoriou, The Sports Financial Literacy Academy
For athletes, real estate represents more than just a place to call home; it is a strategic asset that enhances financial security amid the uncertainties of a sports career. Whether through renting, owning, or investing, comprehending the distinct advantages of each option can empower athletes to find the ideal balance between financial freedom and financial security.
Renting: Embracing Flexibility
For many athletes, the transient lifestyle required by professional sports careers makes renting a practical choice. The need to frequently relocate due to trades, changes in team dynamics, or contract updates can make the commitment of homeownership burdensome. Renting provides athletes with the flexibility to move without the complexities associated with selling a property, ensuring they can respond swiftly to new opportunities or requirements in their professional lives.
This approach not only accommodates the mobile lifestyle of athletes but also aligns with their financial strategies. While renting does not build equity, the freedom it affords, allows athletes to invest in other areas that can potentially yield higher returns. This strategic choice helps athletes maintain an adaptive financial plan that can adjust as their career progresses.
Owning: Building Equity Through Stability
While renting offers flexibility, owning property provides long-term financial benefits. The primary advantage of homeownership for athletes is the accumulation of equity. Over time, this equity can grow into a substantial financial buffer, providing a stable source of wealth upon retirement—a crucial aspect for athletes whose careers tend to be shorter than those in other professions. Equity in real estate not only offers financial security but can also serve as a source of income, through selling or renting, after an athlete has retired from sports.
However, the decision to buy property comes with several challenges. The initial financial burden of making a down payment is significant, and the ongoing responsibilities of maintenance and property taxes require careful financial planning. To mitigate these risks, it is essential for athletes to ensure they have adequate savings to manage a down payment as well as emergency funds that can cover unforeseen maintenance issues without compromising their current lifestyle.
Hybrid Investing: Flexibility and Growth
Athletes who prefer the flexibility of renting but also want to build equity can adopt a hybrid approach combining the above-mentioned options. This strategy involves purchasing properties that serve dual purposes: they can be potential personal residences in the future while acting as investment vehicles in the present, generating both rental income and capital appreciation. This particular strategy, accommodates the need for a home base while also capitalizing on the financial benefits of property investment.
This approach is particularly advantageous for athletes whose careers often involve frequent relocations and uncertain durations in any given city. By investing in real estate, athletes can secure an investment that appreciates over time and provides a stable monthly cash flow, while also retaining the option to occupy their properties when their lifestyle or retirement plans stabilize.
Exploring Alternatives in Real Estate Investment
For athletes interested in real estate without the complexities of direct property ownership, diversifying with Real Estate Investment Trusts (REITs) or real estate funds offers a practical strategy. REITs are companies that own or finance income-producing real estate, providing investors with dividends generated from rental income. Real estate funds, which can be mutual funds or Exchange Traded Funds (ETF’s), invest in a variety of real estate securities, including REITs. This allows investors to gain exposure to a broad portfolio of properties with professional management to handle market volatility and tenant turnover, while maximizing rental yields.
Balancing Choices
Choosing between renting, owning, or investing in real estate depends on an athlete’s current lifestyle needs, career stability, and financial health. Each option caters to different stages in an athlete’s life and career, making it possible to transition smoothly between them with proper planning and understanding of each method’s benefits and limitations. While real estate offers substantial benefits, it also comes with complexities that require specialized knowledge. Athletes should engage with financial advisors and real estate professionals who understand the sports industry’s unique challenges and can provide insights and strategies tailored to both their career and personal life.
The Money Smart Athlete® Blog is established and run by the Sports Financial Literacy Academy® (SFLA). Through its education programs, the SFLA has the vision to financially educate and empower athletes of all ages to become better people, not just better athletes. For more information on our courses, our SFLA Approved Trainer Program®, and how they can benefit you and your clients, please get in touch with us at [email protected].
