Many people get tripped up on whether to buy or lease/rent. We buy when we should lease and lease when we should buy. For professional athletes, these decisions have greater impact due to their typically short careers.

Professional athletes tend to envision extended careers with one or more lucrative free-agent deals. The reality, however, is that the average career length in the NFL is 2.6 years; in the NBA, 4.8 years; and in the MLB, 5.6 years.

When it comes to big-ticket purchases, there are two dilemmas:

• How much to spend
• Whether to buy or rent/lease

Let’s start with a commonplace decision: buying or leasing a car and what athletes or anyone else needs to know:

Buying—The price includes taxes, insurance, maintenance and repairs. The higher the car’s base price, the higher these other costs, which is one more reason why a rookie should avoid vehicles with a six-figure price tag. Buying a car requires a larger cash outlay than leasing and typically a down payment of 10 percent to 20 percent.

Leasing—You pay to use the car for a finite period, typically three years. You agree to make the lease payments, drive less than a set number of miles, maintain the car in good condition and return it at the end of the lease term.

Leasing makes sense if you want and can afford a new car every three years. If you plan to keep a car five years or more, buying usually saves money. Other things being equal, the best value is a certified pre-owned car that you can reasonably afford and can keep at least five years. 

Buying or renting a home is obviously a bigger decision than a car. But, as happens with a car, a higher-priced house leads to higher property taxes, insurance payments and maintenance costs. Buying a house also means entering into a 30-year mortgage commitment.

In this context, it doesn’t make sense for most young athletes to buy a house until they have signed a long-term veteran contract and know where they’ll be playing in future seasons and whether future guaranteed earnings will make a mortgage affordable.

In lieu of buying a home, there are advantages to the next option—renting: the flexibility of a one-year lease and reliance on a landlord to make repairs.

Of course, there remain the advantages of buying a home, such as living the American Dream and benefiting from appreciation of the house over several years, as well as the mortgage deduction.

Bottom line: Whether you’re an athlete or not, don’t rush into a decision. Don’t rely on advice from a car dealer or a realtor, who will profit from your purchase. Do consult with a financial advisor whose interests are aligned with yours. 

Jeffrey S. Gerson and Shawn P. Landau are Financial Advisors with the Wealth Management division of Morgan Stanley in New York City. The views expressed herein are those of the authors and may not necessarily reflect the views of Morgan Stanley Smith Barney LLC, Member SIPC, http:// www.sipc.org. Morgan Stanley Financial Advisors engaged Worth to feature this article. Gerson and Landau may only transact business in states where they are registered or excluded or exempted from registration, http://fa.morganstanley.com/ggmgroup. Transacting business, follow-up and individualized responses involving either e ecting or attempting to e ect transactions in securities, or the rendering of personalized investment advice for compensation, will not be made to persons in states where Gerson and Landau are not registered or excluded or exempt from registration. Morgan Stanley Smith Barney LLC o ers insurance products in conjunction with its licensed insurance agency a liates. Morgan Stanley and its nancial advisors do not provide tax or legal advice. Individuals should seek advice based on their particular circumstances from an independent tax advisor. Certi ed Financial Planner Board of Standards Inc. owns the certi cation marks CFP®, CERTIFIED FINANCIAL PLANNERTM and federally registered CFP (with ame design) in the U.S. CRC1968224 1/18