Floyd Mayweather Makes Record Investment in NYC Affordable Housing
Professional athletes' careers can be lucrative and exciting, yet they are often filled with a number of pitfalls. One of the most common, but underreported challenges that players face is not only how to leverage their years in the limelight, but how to financially prepare for retirement. Professional athletes’ careers are extremely short, and unless they have established a highly public persona that can be sustained in retirement, their endorsements dry up at just about the time they stop getting paid to play. In other words, these athletes often have a very short period of time in which to set aside a nest egg.
Unfortunately, many of these athletes overspend during the period of time when they are flush with cash, assuming that their careers are going to be the exception and not the rule, and they will have large incomes for many years to come. The number of professional athletes who retire without having prepared for civilian life is staggering, and more than a few superstars have spent what should have been their best years toiling just to get by.
Fortunately, the last few years have seen a slow yet sure change in mentality as today's athletes have begun to look back at their predecessors and learn from their mistakes. More high-profile athletes are making an effort to save and invest during their careers, setting them up for later in life. One way pro athletes are using their income wisely is through real estate investment, and a few remarkable headline-grabbing investments have made most of the news recently.
Mayweather Invests $402 Million in NYC Apartment Portfolio
Notoriously undefeated boxing sensation Floyd "Money" Mayweather is living up to his nickname with a record $402 million invested in affordable apartments in New York City. While the exact address of the sale was not disclosed, the acquisition focuses on the upper Manhattan area in New York City. Mayweather's purchase will add 1,000 units across 60 buildings to his real estate portfolio, making it one of the largest multifamily property purchases in Manhattan this year. The acquisition becomes the second largest in Manhattan this year, behind a $672 million property transfer from Michael Stern to Silverstein Capital Partners, although that sale was a distressed transaction.
The first phase of the transaction closed in mid-October, and the remaining sale is expected to be completed in the fourth quarter of 2024 or early 2025. In all probability, most of them would continue to be affordable housing, because in that way, Mayweather could utilize valuable tax benefits. A number of the buildings being acquired in the sale have Title XI tax exemption benefits, which provide as much as 40 years of tax breaks, provided at least two thirds of the units remain affordable.
Affordable Housing Crisis in New York City
Concomitantly, in Manhattan—just like in the rest of the country—finding affordable housing has become extremely difficult over the last few years, as the national housing shortage deepens and rent prices continue to grow faster than wages. It is estimated that there is a shortage of 7 million affordable homes for the 10.8 million extremely low-income families in the US. In addition, more than 70% of extremely low-income families put more than half of their incomes toward rent. There is no place in the US where someone working full time on minimum wage can afford to sustain a two-room apartment.
Beyond this very-low-income segment of the population, things get only moderately better, as up to 50 percent of the US population finds it difficult to locate housing that meets the threshold definition of being "affordable." Affordable housing is defined as that which costs less than 30 percent of a family's gross pre-tax income. A person living in a house that costs over 30 percent of one's gross income increases greatly the possibility of homelessness, which in itself increases the risk of falling into the poverty cycle.
Affordable housing affects not only individuals, but society, as well. In 2022, New York City experienced a net loss of 160,000 residents due to outmigration, largely due to an inability to access affordable housing options. The estimated financial cost to the city was more than $300 million in revenue from sales taxes and income taxes. New York City also has double the national rate of overcrowding, with over 170,000 residences averaging multiple people per room. This overcrowding crisis is partly due to the lack of affordable housing, which has further repercussions in reducing quality of life and productivity.
In Conclusion
Studies have found that a shortage of affordable housing in major regional economies, such as New York City, can have a potentially negative impact on the national productivity rate and economy. Some estimates put the loss in productivity from an undersupply of housing, reducing GDP by as much as 2 percent. As the shortage of housing continues to develop across the US, solutions should be pursued to make affordable housing available at all income levels.
