first home

Buy your second home first, says wealth manager for sports players

By LINSEY STONCHUS

Despite the ongoing pandemic, the affluent generally managed through it comfortably, with many having learned from the Great Recession of 2008-09 and the resultant economic crisis.

This time round, the hospitality, entertainment and service industries took a hit, emphasizing that financial safety nets are necessary, even among the most successful of consumers. Joe McLean, managing partner at Intersect Capital – manager of wealth for elite sports players from the NBA, NFL, PGA and MLB –offered key advice on preparing for the unexpected, home buying and establishing financial security, including for the affluent.

“Pay yourself first before you pay any other bill and before you accessorize your life – that’s the first step to achieving financial freedom,” Mr. McLean said. “If you don’t have a reason to say no, then, we’ll [spend] seasons of our life living paycheck-to-paycheck, regardless of income.”

Ball in other court

One of the keys to Mr. McLean’s success in managing pro-athletes’ wealth is that he was previously a professional basketball player – he knows where the shoe pinches. This major transition lent him both career and financial wisdom.

“I would emphasize for those out there that are considering and are in the middle of a career change to seek mentors, seek advice,” Mr. McLean said.

“Be as curious as you possibly can,” he said. “My first boss told me ‘You don’t know nothing about nothing,’ and the sooner you start realizing that, the sooner you start learning something,” he said.

When setting oneself up for greater financial security and success, it is worth considering a dedicated financial advisor.

Important considerations to keep in mind is whether or not the advisor is a fiduciary, his or her personal credit score and if he or she is investing in the same investments recommended to the client.

If the advisor is not guiding the client with the same practices that she successfully uses for herself, then she is in no position to offer financial advice.

Turning to financial goals, one of the best practices is to keep in mind is always putting aside money first. Milestones, such as purchasing real estate, help achieve this.

second home
“If I had to do it again, I probably would have bought a home that produced income before I bought a home that provided a roof over my head,” Mr. McLean said.

Making home pay

When discussing property buying, Mr. McLean offers two bits of advice.

First, think beyond purchasing a home that the consumer can afford five years from now.

Instead, the consumer should consider where he or she wants to live five years from now. This rings particularly true as there is more flexibility now, in this pandemic-driven environment, on where consumers choose to live.

Mr. McLean also recommends purchasing income-generating real estate before buying a first home.

“If I had to do it again, I probably would have bought a home that produced income before I bought a home that provided a roof over my head,” Mr. McLean said. “In other words, I would have bought my second home first.

“Quite often, we’re in a race to own a home, instead of racing to own cash flow,” he said. “I love the idea of someone thinking about how to buy a home that will provide income instead of something that may put you in debt for a long period of time.”

FOCUSING ON INCOME and larger financial goals before all of the other luxuries that money can afford promises long-term security through any downturn.

This past year proved that the market is unpredictable, no matter how optimistic it looks. Emerging from this bruising period, it is important to remember preparedness shields consumers from the unexpected.

“[The pandemic] was a big wakeup call for all of us, frankly,” Mr. McLean said.

“What we’ve all learned is that there’s things you can control and there’s things you can’t – you can’t control pandemics,” he said, “but you can control how you save and how you spend. In periods of uncertainty, it’s important to have a process and a plan.”

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