This is a guest post from Ikem Chukumerije, CEO/President of SportsRelocation.com
The stories have been flooding the news wires for months now. It seems you can’t pick up a newspaper or turn on the television without hearing about another foreclosure or another town struggling under the weight of the current recession. Job growth is weak at best, the stock market resembles a Yo-Yo with its up and down nature, and nobody is really sure when things will turn around for the economy.
In other words, this is the perfect time for professional athletes to invest in real estate. That last sentence wasn’t a misprint! This really is a great time to look at long-term investing and there is no better long-term investment out there than real estate.
The old adage “it takes money to make money” perfectly applies in today’s real estate market. Great bargains in practically every city in America are available for someone who has the money to make those investments. Now I hear you saying, “he’s lost his mind, there is no way to predict how quickly the market will make an upturn,” and you would be absolutely correct in your assessment of the possible length of this recession. That is why you have to think long-term with regards to a real estate investment.
If you plan on entering this volatile market be prepared for initial setbacks; but I have no doubt, nor do any market watchers, that in the long run prime real estate will bounce back in a big way. Some markets to watch in the next couple years are in cities that have strong high-tech, military, or manufacturing foundations such as the following:
- Madison, Wisconsin
- San Diego, California
- Raleigh-Durham, North Carolina
- Austin, Texas
- San Antonio, Texas
- Des Moines, Iowa
- Omaha, Nebraska
Similarly, there are markets that because they lack that foundation will have a much harder time bouncing back in the near future. They would include:
- Orlando, Florida
- Pensacola, Florida
- West Palm Beach, Florida
- Atlantic City, New Jersey
- Phoenix, Arizona
With the current low interest rates for ten-year, fifteen-year, and thirty-year fixed mortgages, and government incentives for investors, now is the perfect time to enter the real estate market and build a portfolio for your future. Tax advantages are many and long-term appreciation is an added benefit. Real estate is a necessity for Americans, as much of a necessity as food and clothing. The real estate market may have taken a temporary hit during these hard times but history tells us that the wise investor cannot go wrong by investing wisely in choice markets.
There are those who would tell you that investing in real estate is a high-risk investment, and if we are talking about short-term investing that is certainly the case. But if one is looking at making an investment with decades in mind then there is barely any risk at all.
The average professional athlete has a playing career of approximately five years. That is five years of premium salaries and endorsements that will have to be used wisely, so that when the playing career is over there is a solid financial foundation to rely upon. My recommendation is to find a real estate broker who is knowledgeable about the latest national trends and accustomed to dealing with the market(s) that appeal to you (e.g. luxury condos or single-family units). Once you have established trust with this broker, you then need to take the steps to guard against the future when your career comes to an end.
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Joshua Mallone
05-16-2011Nice post. I wonder what percentage of athletes actually think long term as it relates to their investments and portfolio. Based on recent news...not many. Maybe this will give them additional insight to think about it. JM
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Matthew Allinson
05-17-2011Your probably right that it's a minority, Joshua. While I think real estate looks attractive, private equities should only comprise a small part of an athlete's portfolio given the risks. From the cash-strapped players (e.g. there is a boon of locked out NFL players taking out high-risk loans with 30% interest rates) to those who mismanage their finances and don't save, investing in real estate is not going to be a priority or an option. If you have a financial plan, you have plenty of savings and your financial situation is stable, and you are informed about using real estate as an investment vehicle, then I would say the opportunities listed by Ikem would at least be worth looking into.
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Bill Westrom
05-19-2011I like the advice to take advantage of on obivous opportunity, but two critical elements to consider: how are you financing the properties and who is going to manage?
Financing under conventional practic (long term fixed rate)no matter how low rates are is suicide. It is why the consumers of this country are in the shape they are in. You are porposing a business so why propose financing like a consumer. Secondly, professional athletes are not business managers let alone property managers. They can be, but they're focus is on being a professional athlete. And you really can't trust most property management companies out there any way. So if you are going to make such recomendations make sure all the bases are covered so an athlete doesn't have to take a 30% loan from a loan shark to maintain the business model you are proposing. Provide them with solutions with the business idea not just the idea. I can provide the solution at truthinequity.com. People in the Bengals organization and on the Hill in Washington trust me so can you!
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Matthew Allinson
05-19-2011Bill, you make great points. You need to be informed about any investment you make and make sure you have the proper resources to see it out. My friend likes to say "sell me the quarter inch hole, not the drill." Do you work with Bengals players?
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