By Constantinos Massonos, Contributor
The idea that financial planning is not optional, but a must for any professional athlete who aims to avoid financial trouble and build towards financial freedom, has been discussed in a great number of articles previously featured in the Money Smart Athlete blog. Achieving the goals set in your financial plan will greatly depend on your ability to make your money work for you, by investing, based on the basic principle that the riskier the investment, the higher the potential return.
The global economy currently offers a wide variety of investment options that you can include in your investment portfolio. Your choice will depend on your personality and the amount of risk you are willing to take, but don’t be fooled by individuals offering risk-free investments, no such thing exists. If you don’t like risk, investing in real estate is considered a relatively safe, low risk, investment and suitable for more novice investors.
Investing in real estate means purchasing property such as land or buildings with the intention of earning a return on the investment, through rental income or through reselling it in the future, or both; such investment can be either short-term or long-term. Real estate investments can turn out to be quite profitable investments but they usually require patience and time commitment. Many famous sports stars such as NBA and NFL stars, Earvin “Magic” Johnson and Joe Montana have invested a great percentage of their career earnings into real estate and managed to build real estate empires.
There are three types of investment properties that you may invest in:
- Residential: You can purchase a residential property and rent it out to collect monthly rent. Residential properties include family homes, condominiums, apartments, townhouses, or any other types of residential structure.
- Commercial: You can purchase commercial properties that are used specifically for business purposes such as commercially-owned apartment buildings or retail stores. These properties may bring you higher returns because leases tend to be higher than residential, but maintenance and improvements costs can also be higher.
- Mixed-Use: You can purchase a mixed-use property that can be rented out for both commercial and residential purposes. For example, a building may have a retail store on the ground floor and residential units on the upper floors.
Before you start investing your hard-earned money in real estate, you need to do your research. Get to know the area you intend to invest in and analyze the price history by talking to real estate agents and locals to determine the best and most profitable use for your investment property. Successful real estate investing is as much about what you know as who you know.
It is critical to build a trusted team of experts that includes real estate agents, contractors, lawyers and accountants that will provide support through each and every stage of your investment.
Keep things simple and adjust your investment according to the goals you have set in your financial plan. Eventually you should have a low-risk, high income investment that will give you the financial backup to do whatever else you plan to do after the end of your playing career. For a discussion on how the real estate market works and assistance on finding suitable real estate advisors, you can get in touch with us via e-mail at [email protected].