Every year, the NFL’s top stars generate headlines for their eye-popping salaries and lucrative endorsement deals. And while only a few players make $20 million or more annually, the starting salary for a rookie is now $510,000 a year. Even average players will make over $1 million a year after a few years in the league — far from chump change. But NFL careers — and NFL income — don’t last forever. And two-decade veterans like Drew Brees or Tom Brady are the exception — not the rule. The average NFL player’s career lasts just 3.3 years, not nearly as long as we envisioned on Draft Day. And even if our careers last longer than average, there are decades between our final day on the field and when we can draw down NFL pension benefits.
Hopefully, you’ve been able to save some of your earnings while you were active. But now that you’ve recently retired, you may find yourself unsure of what to do next. And you’ve probably heard one of the many unfortunate tales of veteran NFL players who made millions but are now broke. It happens far too often, and not just because most players lack the financial education necessary to make five-, six- and seven-figure money management decisions effectively. It happens, in part, because we feel uncomfortable admitting we don’t know what to do and asking for guidance. We may even feel guilty that we have the money we earned, making us more reluctant and anxious to talk or even think about it. And our anxiety often leads us to make poor financial decisions, like continuing to ball out to keep up with former teammates and celebrities you may have met, even after the NFL checks have stopped.
It’s normal not to know what to do. After all, you’ve dedicated yourself to a life of football, not finance. When you were in uniform, you had clear goals. And you spent years attacking them aggressively — whether in the weight room, in practice, or on the field. But off the field, your financial goals may seem vague and unclear, making it hard for you to know where to start. And with your family and others relying on you, you feel championship-game-level pressure, but you don’t have a playbook that can get you the win.
You also may have multiple people in your ear trying to steer you in various directions. Financial professionals may have contacted you with slick pitches that sound too good to be true. Family and friends may approach you with business opportunities you’re not sure quite how to evaluate — or say no to. And they also may come to you looking simply for a handout, which can add to the stress you’re feeling about your finances in general.
Finding a path to prosperity
If this sounds familiar, again, you’re not alone. The decisions you make with the money you’ve saved, if used wisely, can ensure that you can continue to live well, meet your financial obligations, and build lasting wealth for you and your family. But how you choose to invest isn’t just a numbers game. You also need to ask yourself what kind of lifestyle you want to lead.
If you look at the paths many financially successful veterans have taken, they’ve been as varied as the veterans themselves. Some have started businesses, others have invested in them. Some have invested in the stock market, and some of the most recent veterans have even invested in cryptocurrencies.
Some investment choices require a lot of hands-on work. You might want to follow in the footsteps of a Richard Sherman or Sidney Rice and buy a franchise or two. That may be a great option if you have a strong urge to manage a business and are single without children and few obligations. But it may not be ideal if you have a young family, and you’re looking forward to being with your children during their formative years.
The power of investing in real estate
If you’re looking for a way to build and grow your wealth that provides you the flexibility of being as hands-on or as hands-off as you’d prefer, real estate may be the path for you. If you look at the portfolios of many of the most successful retired NFL veterans, you’ll invariably find some real estate investments. In fact, some of the wealthiest individuals in the country have substantial real estate holdings. And when you understand the financial benefits of real estate investing, it’s not hard to see why.
Investing in real estate can provide a stable stream of passive income. When you buy a residential or commercial property, you’ll receive checks from your tenants each month, which can be pretty lucrative after taxes and expenses. You can invest and manage your investment directly by buying property and becoming a landlord. Or you can hire a property management services firm to handle everything from rent collection to maintenance and repairs.
Investing in residential real estate
When you buy a residential property, such as a single or multi-family home or apartment, you cannot only earn rental income but also benefit from the ability to deduct depreciation, mortgage interest, insurance costs, and maintenance expenses on your taxes. And if your property may appreciate over time, allowing you to raise rents or even sell your property at a substantial profit.
But beyond the boost to your bottom line, residential real estate investments can be transformational for your entire family. Having passive income each month can give you the freedom to spend time with them and explore your passions. If you don’t intend to manage your properties yourself, you can establish a holding company for your real estate investments. Rather than paying some third-party to manage them, you can offer family and friends with either prior experience or transferable skills the opportunity to do so. Or you could manage your properties with your children, providing them a meaningful financial and business education.
Investing in commercial real estate
But residential real estate investments aren’t the only opportunity to build generational wealth for yourself and your family. You can also buy a commercial property and lease out its office, retail, or other space to local businesses. Commercial tenants are generally more stable than residential ones and often sign three to five-year leases, which, again, provides you with stable passive income. Further, because commercial tenants are usually using your property to showcase their business, they have a vested interest in keeping it well-maintained. And most commercial tenants operate during the day. While you might have to deal with a residential tenant calling you late at night because the water heater stopped working, you likely won’t have to deal with those problems during the day.
Commercial property investments are more expensive; however, commercial rents are generally significantly higher. And unlike in residential real estate, where you assume the costs of maintenance, insurance, and taxes, standard commercial leases (triple net leases) require you only to pay the mortgage cost. The tenant pays the property taxes, insurance, and maintenance. Companies that want a high degree of control over the look and feel of the building, such as McDonald’s, usually agree to these terms, leaving you to sit back and collect a check each month.
These are just a few of the ways in which you can use real estate to provide financial security and opportunities for your family. If you’ve just retired or been ff the field for a little while but are still winging it with your savings, you’ll want to engage the services of a fee-only Certified Financial Planner. A CFP can help you develop a plan to manage your expenses, clarify your goals, and help you identify and understand many available investment opportunities, including real estate. And you should take advantage of the relationships built and networks you’ve gained access to while playing in the league. The NFL and NFLPA also provides both current and former players with comprehensive financial education resources that can help you make the right decisions for you and your family.
No matter whether you purchase residential or commercial real estate, by buying properties for the long-term, you can create the income you need to support your family, jobs for your community, and assets to leave to your children. Investing in real estate can put you and your family on a path to long-lasting wealth. Join me on another journey to a lengthy and profitable career in a very simple game!
JT Thomas III