By Charles Frazier for City National Bank | Read the original article here
This interview is part of our series, Building Your Team — Helping Professional Athletes Build Their Team of Professionals.
Many professional athletes come into their wealth at an early age, but may not be prepared to manage such a sudden, large influx of earnings. Connecting athletes with trusted advisors is imperative to ensure that these individuals are able to make their wealth last throughout their lifetimes — not just at the peak of their careers.
Professional athletes often find themselves in a position to purchase sizable real estate assets at a young age. Whether it be buying or leasing homes, their real estate needs tend to be career specific and benefit from having the expertise of a broker with a sports and entertainment client base.
Kofi Nartey is a celebrity and luxury real estate expert and national director of the Compass Sports and Entertainment Division. Kofi has been a correspondent on celebrity and luxury real estate for more than 100 national television and print media outlets. He was also a regular featured agent on HGTV's Selling LA. His clientele includes such high-profile professional athletes and entertainers as Kevin Durant, Derek Fisher, Iggy Azalea, Nick Young, James Van Der Beek, Neve Campbell, Candace Parker and Michael Jordan. In 2017, his book, “Sellebrity: How to Build a Successful Sports & Entertainment Based Business," became an Amazon best-seller.
Charles Frazier, sports and entertainment banking team lead at City National, sat down with Nartey to discuss how athletes can best navigate their often complicated real estate decisions.
Charles Frazier: How did you get started in the sports and entertainment side of the real estate industry?
Kofi Nartey: I went to University of California, Berkeley for undergrad where I played football. When I finished there, I got a brief shot with the Oakland Raiders. I also got into acting for about 10 years.
Because I had a background in sports and entertainment, and because I knew that their lifestyles were different, as well as having a lot of friends and clients at the time who were being taken advantage of, I knew that was an area where I could help them. So I started focusing on sports and entertainment real estate in 2007, and I haven't looked back since.
Frazier: Why should a professional athlete hire a sports-specific real estate agent?
Nartey: The main reason — we can help them avoid some of the pitfalls and mistakes that people will make if they don't have experience working with someone in sports and entertainment. There are things that are different about the way most athletes live and work, and understanding the nuanced differences of their lifestyles is crucial.
They can be traded at a moment's notice, and they have increased privacy and security needs.
For example, I had a client who was traded to one team. After they signed a lease, they were traded again to another team. Normally, they'd be on the hook for the lease for 12 months. But we put provisions in our clients' leases that allow them to get out of leases early in the event that they do get traded. We've identified nearly 100 different tips and tools, resources, and even contract addendums that protect our sports and entertainment clients better and that are specific to their needs.
Frazier: Given that many professional athletes often have to relocate, what are some of the mistakes that you've seen professional athletes make when not choosing a sports-specific real estate agent?
Nartey: It begins with the decision to buy or lease. For example, if they are going to a new team in a city that they've never lived in and don't really have contacts, it might make sense to lease first.
It also depends on the length of their contract. If they're just there for a year or two years, leasing might still be the better option. There are some rare opportunities when they're moving to an up-and-coming market where they would want to buy because the market is hot.
If an athlete is planning on spending his or her off seasons somewhere else, then that's another thing to consider.
It can also boil down to very simple things like countertop heights. If an athlete is 6-foot-6 or taller, for example, we don't show them places with counter tops that are built for someone 5-foot-3.
Finally, you need to factor in where the athlete works. In football for example, they practice in one area and play games in another. Often those can be as much as an hour apart. If they're not dealing with a real estate agent who thinks about that, the agent might put them close to the stadium thinking, "Well, that's where they play on Sundays." Well, they only play there on Sundays, sometimes Mondays, and only half the season. The rest of the time they're on the road. The other four to five days of the week they're going to the practice facility, which means proximity to that is much more important so as to avoid fines for being late.
Those are all things that real estate agents may not think about when working with an athlete if they don't have that experience and knowledge.
Frazier: How is working with athletes different from your regular residential buying or leasing client?
Nartey: Most athletes and entertainers make money for a small portion of the year. So that's when I'm calling someone like yourself, who has people who can lend to someone based on that type of income. Because that can be a big challenge when trying to get financing.
One of our former clients, who was buying a home in another area, was working with an agent who didn't have entertainment experience and the agent referred him to a lender who did not have experience working with clients with fluctuating income either. At the final hour of the negotiations, they had removed all contingencies, which meant the deposit on the home was at risk. The lender came back and said, "Well, we can't give you the loan."
The athlete had almost a six-figure deposit that they could have lost. I had to hop on the phone with the other side of the transaction to negotiate getting them some extra time so that I could find them a lender who might be able to provide them with financing despite their unique income situation.
Frazier: When a professional athlete is looking to lease a home or purchase a home, what are some pieces of advice you give them on why they should choose a specific home?
Nartey: We discuss what their needs are both short term and long term. Is this a place they're going to spend their off seasons? Are they going to try to raise a family here?
With that information, the main focus becomes lifestyle. Proximity to the things that are a part of their lives — schools, practice facilities, gyms, entertainment.
Also there are privacy and security concerns. Making sure that they are either in a gated community or a concierge secure building so you don't have TMZ rolling up to your house, you don't have stalkers or fans who can come straight to your front door. Also, when you're traveling, we want to make sure your home is secure and private.
As for any client, real estate is a long-term investment strategy, and with the professional athlete you need to strategize based on the duration of time the athlete thinks they are going to be living there.