Our guest today is Ryan Harris, former Bronco and Super Bowl 50 champion turned real real estate investor. He came on the show to talk about his journey and investing philosophy, as well as discuss some key takeaways from a recent portfolio analysis we did.

Learning to Think About the Long-Term

As an athlete, Ryan wasn’t taught to think about the long-term.  In high school, his goal was to get into college; in college, his goal was to get into the NFL; in the NFL, the average career is only three years and two games.  Without a focus on his future, he blew his first million dollars. 

He realized as an NFL player that he had a short amount of time to make money, so any mistakes were exponential.  After that experience, he started taking small steps to go in a better direction.  He began listening to podcasts, reading books like The Millionaire Next Door, and reaching out to mentors. 

One mentor was former NFL-er turned real estate developer Emmitt Smith.  Smith taught him that there’s more than one way to make money in real estate, from the development companies, to construction crews, and even the supplies. 

Another mentor based in Boulder, CO taught him practical things like flat roofs require more maintenance and how vacancy and cap rates affect returns. 

Using the information he learned, he started investing in real estate. 

Transitioning from NFL Player to Real Estate Investor

Ryan says that while you don’t have to be wealthy to get into real estate, every wealthy person he knows is in real estate.  A big draw of this industry is the stability that it offers.  He has other investments, like stocks and a 401K, but he knows there is less guarantee in those investments. 

He enjoys the culture of real estate, especially how people don’t tend to brag because there’s always someone who has more.  However, he acknowledges that there was resistance when he first started to break into real estate.  The first broker he talked to couldn’t wrap his head around the idea that someone who looked like him wanted to invest, despite the fact that he was a Super Bowl champion who was already investing in the stock market. 

Ryan persevered because he knows that real estate is the number one way to create intergenerational wealth.  He was patient and willing to forgive others for their lack of experience; he found a different broker and continued to invest. 

Now, working in the industry himself, Ryan loves helping all types of people understand their options.  Whether someone is looking at a $2M property or is a first-generation homeowner, he wants to show them how investing in real estate will help them.  He’s helping Finance of America open a Denver branch and knows that because real estate is for everyone, he wants to hire everyone.  He wants to get different types of people involved on the team in order to help as many people as possible. 

Philosophy: Balance Security and Risk

Ryan’s approach to investing is to balance security and risk.  He sees cashflow as security, in the same way someone working a regular job expects and relies on their bi-monthly paycheck.  He also learned early on that he doesn’t need to take all of the leverage available to him.  However, he appreciated learning how he can use some leverage to increase his holdings for long-term wealth building and boost his flexibility and stability. 

He saw firsthand in the NFL that a successful quarterback like Peyton Manning will ask 100 questions in a 1-hour meeting to get all of the details and make sure everyone is on the same page.  Ryan brings that mindset to investing in real estate.  The reason Ryan has learned so much about real estate is that he isn’t embarrassed by what he doesn’t know.  A lot of important conversations are prevented when people are too embarrassed to ask questions. 

Importance of Discipline: More Is Not Always Better

Ryan learned in the NFL that more is not always better and the same is true for real estate.  On paper, $80K a year more looks good, but he’s seen people ruin their lives and families spending that money.  In the long run, a mindset of “more, more, more” is dangerous.

For his second book, he wants to focus on financial literacy, teaching readers things like the difference between cost and price.  His focus is on financial discipline and planning for the future instead of the present.  He wants people to think about debts, monthly expenses, and see the larger concept of long-term wealth building. 

Ryan saw at an early age that a lot of football players want to be famous, not great players.  He calls this choice “fame or game” and it can distort what’s really important.  This mindset can bleed into other aspects of life, too.   

Over time, Ryan learned that he doesn’t care what other people think.  When he was younger, he wanted a big house because he could afford it, but now he realizes that other people’s opinions aren’t his responsibility. 

What’s More Important for Success: Mindset or Tactical Knowledge?

There is a lot of debate over how much of success is mindset vs tactical knowledge.  For Ryan, he sees success as being entirely about mindset.  Are you willing to learn something new?  Are you willing to say that you need to get better and take responsibility when something is your fault?

During spring practices, Ryan realized he was struggling to breathe while running plays.  So, he reached out to an MMA fighting coach and asked for help to improve his breathing.  He admitted he didn’t know how to breathe properly and was willing to take the steps he needed to learn. 

In all of Ryan’s ventures, his success depends on what he doesn’t know. 

Investing Journey: From a Primary Residence to Six Doors

Like many investors, Ryan’s first investment was his primary residence.  From there, he invested in a fourplex and then a duplex.  He learns towards properties with extra bedrooms, like his duplex that has 3-bedroom units. 

While he’s interested in getting more doors, his investing philosophy is no debt and low risk.  He’s drawn to fourplexes because he can get a residential loan that’s 30 years fixed, whereas properties with more units require a commercial loan. 

Ryan’s rule had been to not touch cashflow.  Leveraging properties usually results in less cashflow, so he was hesitant to make any moves.  I showed him how he can leverage his properties to gain more doors without touching his cashflow.

How to Leverage Your Portfolio While Keeping Equity

We did a portfolio analysis to see how he can leverage his investments while sticking to his philosophy.  The key to understanding how to leverage up within these parameters is seeing how to spread out the capital among more units. 

To put it simply: if he purchased a million-dollar property with $250K down, he would have $750K in equity.  He could spread out that equity by buying more doors: each down payment in a new property will be equity in that property.  Typically, investors put down 25%, but Ryan likes to put more down, which would give him more equity.  In the end, he has the same amount of equity as when he started, but now he tripled the number of doors he owns. 

Why Do I Want to Leverage My Portfolio?

Thinking of the long-term, if he makes these moves at 36, he’ll have 20-30 years to pay down these notes, depending on the down payment and type of loan.  Once these properties are paid off, the cashflow isn’t just 3x, but usually closer to 6x.  The multiplier is exponential. 

These options to leverage his portfolio allow him to pay off the properties over a long period of time.  At the end, instead of having $20K in cash flow, it could be closer to $120K or even $150K. 

Every investor has their own rules and goals, so I tailor their portfolio analysis to fit within their guidelines.  Because Ryan’s approach is low risk, I put stopgap measures into his plan.  We discussed debt coverage ratio, which is the rule that for every dollar of debt, there needs to be $1.25 of income.  For Ryan, he’s more comfortable if the income is $1.50.

For most investors, a 25% down payment is acceptable, but Ryan feels more comfortable at 40%.  There are a lot of options for investors to create their own model. 

Connect with Ryan

To learn more about Ryan’s philosophy, read his book Mindset for Mastery.  You can also check out his website, Ryanharris68.com.  He wants to help people win, whether through mortgages; as a public speaker; or as a broadcaster for Notre Dame games.  He realizes that everyone has the opportunity to make an impact.

Connect with Us

If you want your own portfolio analysis with a plan that matches your philosophy and goals, reach out to us.  We’d be happy to sit down with you and figure out how to leverage your portfolio in a way that works best for you. 

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Super Bowl Champion Ryan Harris’s Mindset: “More Is Not Always Better”

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