Devon Kennard, a former NFL linebacker, defied the odds that plague many professional athletes. While most NFL players face financial struggles within five years of retirement, Kennard built a substantial real estate portfolio during his career. Playing for the New York Giants, Detroit Lions, and Arizona Cardinals, he purchased his first rental property as a rookie and continued investing throughout his eight-season career. By the time he retired, Kennard owned over 50 properties, had invested in more than 50 syndication deals, and established a private lending business with his spouse, Camille, in Phoenix.
Kennard’s success story offers valuable insights into financial management and real estate investment. His strategies and advice can be particularly beneficial for high earners looking to deploy their income wisely. Here, we delve into Kennard’s approach to building his portfolio, the common pitfalls he observed among his peers, and the key lessons he learned along the way.
Strategic Investments Amidst a Demanding Career
Balancing an NFL career with real estate investments is no small feat. Kennard’s in-season schedule often exceeded 80 hours a week. To manage his time effectively, he implemented three key strategies:
- Focus on One MarketInstead of spreading his research across multiple markets, Kennard chose one and became an expert in it. This approach saved time and allowed him to make informed decisions quickly.
- Build a Reliable TeamKennard assembled a team of professionals, including a property manager, real estate agent, and lender, before he needed them. This team enabled him to evaluate and close deals efficiently.
- Accept Good EnoughKennard emphasized that five okay leases beat one excellent rental that never gets purchased. He focused on making consistent progress rather than waiting for the perfect deal.
By dedicating just five to seven focused hours each week, Kennard was able to purchase one property per year. This disciplined approach allowed him to build his portfolio systematically without compromising his NFL career.
The Pitfalls of Lifestyle Inflation
One of the most costly mistakes Kennard observed among his peers was the tendency to treat lifestyle inflation as a reward rather than a tax. Many athletes, upon receiving their first significant contract, would upgrade their homes, cars, and vacations, only to find themselves trapped in a cycle of increasing expenses. This pattern often led to financial instability once their playing days were over.
Kennard advised redirecting income increases into investments that generate additional revenue. For example, instead of spending an extra $1,200 on a car payment, he suggested investing that amount in a property that could generate rental income, build equity, and provide tax deductions. Most high earners don’t have an income problem. They have an allocation problem.
Rental Properties vs. 401(k) Investments
When asked to choose between maxing out a 401(k) or purchasing one rental property per year, Kennard opted for the rental properties. While he acknowledged the benefits of a 401(k), such as tax deferral and employer matches, he highlighted the advantages of owning rental properties:
- Visibility and ControlRental properties allow investors to see and manage their assets directly, unlike a 401(k) where investments are often abstract.
- Value AdditionInvestors can add value to their properties through improvements and management, which is not possible with a 401(k).
- Tax BenefitsRental properties offer tax deductions for depreciation and other expenses, which are not available with a 401(k).
- Skill DevelopmentManaging rental properties helps investors develop valuable skills in evaluating deals, managing tenants, and reading markets, which compound over time.
Kennard argued that after ten years, one path leaves investors with a portfolio of properties and valuable skills, while the other leaves them with a larger account balance but no additional expertise.
Evaluating Investment Deals
In addition to owning rental properties, Kennard has ventured into private money lending. He uses a framework of four C’s to evaluate potential deals:
- CharacterAssessing the borrower’s track record and reliability.
- CapabilityDetermining if the borrower can execute the plan.
- CollateralEvaluating the property’s current value and potential after repairs.
- CapitalEnsuring the borrower has sufficient funds for the down payment, monthly interest, and rehab costs.
Kennard also emphasizes the importance of personal investment. He asks himself if he would put his own money into the deal, ensuring that his skin in the game aligns with his lending decisions.
Shifting from Earning to Building
The mental shift from earning income to building wealth is crucial for high earners. Kennard observed that many W2 employees identify themselves with their jobs and spend most of their income without a long-term wealth strategy. He emphasized that your job is not your wealth strategy. Your job is the fuel.
Kennard’s NFL career provided him with the seed capital to build a lasting financial foundation. He advised young professionals to view their income as investment capital rather than spending money. This mindset shift can lead to more disciplined financial decisions and long-term wealth accumulation.
Devon Kennard’s journey from the football field to a successful real estate investor offers valuable lessons for anyone looking to build wealth. His strategies and insights can help high earners make informed financial decisions and secure their future.
