Real Estate Investing Basics

Investor Spotlight: From USMC to FIRE With Just 5 Properties Featuring Dion McNeeley

Expertise: Mortgages & Creative Financing, Flipping Houses, Mobile Homes, Buying & Selling Houses, Landlording & Rental Properties, Business Management, Commercial Real Estate, Real Estate Marketing, Real Estate Deal Analysis & Advice, Personal Finance, Personal Development, Real Estate Wholesaling, Real Estate News & Commentary, Real Estate Investing Basics
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Dion McNeeley started out $89K in the hole. But after reading Rich Dad Poor Dad and discovering BiggerPockets, he dug himself out of debt and climbed his way to financial freedom inside of eight years—without sacrificing the meals out and vacations he enjoys. 

Name: Dion McNeeley

Age: 50

Location: From Tacoma to Olympia in Washington State

What were you doing prior to real estate?

I have been a Marine, a cop, and a truck driver—fun jobs, but they don’t pay six figures.

What got you interested in real estate investing, and how did you get started?

The Marines downsized after Desert Storm. The police department downsized in 2008. I was tired of losing sources of income due to things outside of my control.

I was 40 and a single dad with three kids. I inherited a ton of debt upon divorcing—to the tune of $89K—that I didn’t even know existed. I found the book Rich Dad Poor Dad and was debt-free in six years. Then, two years later, I reached financial independence. Now, I’ll never have to work again in my life!

I choose to work because I love my job. But I’ll never “have” to. I don’t live frugally. I eat out almost every day and go to the movie theatre once a week. I drive a nice truck (paid off) and spend one month a year in Colombia or Thailand.

I learned everything I put into practice by consuming every episode of the BiggerPockets podcasts—the Real Estate show, Business show, Money show, and Rookie show. All of these made my strategy possible. Now, 100% of my W-2 income and 50% of the rental profits are saved for the next deal.

Because money from work is no longer important, I was able to found a non-profit that does job placement assistance. If I never discovered the FIRE movement, I wouldn’t be able to help the people I do—for free.

If I can do this, anyone can. It just takes knowledge and a plan. You got this!

Related: Investor Spotlight: $10K per Month in 4 Years & Retired at 31 With Ryan Chaw

What is your real estate investment plan and preferred investing strategy?

Buy and hold. I buy small multifamily with owner-occupied loans. So, I get very low, 30-year fixed rates. If you buy a single-family house, duplex, triplex, or fourplex, the loans are pretty much the same.

I don't do hard money—there are no balloon payments and no need to ever refinance. I limit myself to four mortgages. This way, I benefit from leverage but am not over-leveraged. I gain appreciation on the total value even though I only paid 20% down.

When I hit four mortgages, I focus and pay one off. The gap between rental income and mortgage expenses keeps getting wider and wider.

I buy properties approximately 30 miles apart with at least two of these close: a base, port, hospital, college, or a Boeing or Amazon terminal. I also search for locations with a population of at least 100K. This way, I have more than one source of tenants, and there is more than one economic driver.

I keep a diversified set of tenants—some military, some Section 8, and some retirees. So, a government shutdown, pandemic, or stock market crash doesn’t affect me very much.

My rental profits are far greater than my living expenses. I have 11 units and live in one, so I have no housing costs. I pay almost nothing in taxes on the rental income due to write-offs and depreciation, plus every month there is also principal paydown. And I don't plan on ever selling, so I'm creating generational wealth.

All of the hard work was in the first two years, learning and getting systems in place. Now, it's pretty much on autopilot. I spent a total of about 20 hours in 2019 working on real estate.

Related: Investor Spotlight: 20 Doors in 2 Years with Tom Shallcross

How much did you have to invest when you first started?

I had $20K. My first investment property was a duplex with 5% down conventional.

Tell us about your first deal.

I was living in a house at the time and was not sure that, as a single parent with three kids, I could handle both working and being a landlord. So, I moved into an apartment and rented out the house as a test scenario.

To be honest, that was the worst tenant I have ever had—it was a nightmare. I almost quit. But I stuck it out, and since then, I have not had any issues even close to that bad.

Once I decided I could do the landlord thing, I started house hacking. I purchased a duplex. I moved into one side of the duplex and rented out the other. This reduced my housing costs to almost zero (from $1,500 to $300), which drastically increased my savings rate (by actually letting me save at all).

How many deals have you done to date?

Five. I have three duplexes, a fourplex, and the single-family house is paid off. My rental profits are more than twice my living expenses.

What is the most important part of a deal for you?

I analyze cash flow to decide if I should take a deeper look. Then, I consider location and condition.

How do you know if a property fits your goals?

I aim for 10% or better cash-on-cash return. However, this only works because my area is expensive, and I do 20-25% down. If I did less down or was in a cheaper area, I would use a different system.

Since 10% may not be enough to justify the time it takes to manage a tenant, for stability and to reduce turnover, I have these criteria:

  • Side-by-side units only—no tenants above or below another
  • Two or more bedrooms per unit and a garage for each unit
  • Lots of storage space so tenants are less likely to move
  • Washer-dryer hookups in each unit, as tenants do not like shared laundry or using laundromats

With this criteria, I’ve had one turnover—ever. And it was because she inherited a house.

Related: How to Calculate Cash-on-Cash Return (Made Easy!)

What red flags do you look out for when purchasing property?

I use traditional loans, so I do not look for places that need a lot of work. I have never done a rehab. I do not refinance to pull money out.

My strategy works for me because I am incredibly lazy. I like to make money and then put that money into a property and have it earn the return I want (10%+). There are faster ways to make more money, but I like simple.

What should people consider before getting involved in real estate investing?

Real estate is not passive—but 20 hours a year beats 40 hours a week. So working an hourly job can be optional, replaced with income from rentals.

What’s your “why”—the reason you pursued real estate investing and your drive to keep going when things get tough?

It’s hard to nail down to one thing. I wanted income that I had control of. I did not want an alarm clock. Plus, my kids will inherit a few million in rental properties! My retirement could have started a few years ago if I didn’t love my job.

How did you find out about BiggerPockets? How has it helped you?

I found out about BiggerPockets from YouTube, and I cannot imagine doing anything I have done without the podcasts. Even when it is a person being interviewed who is doing something I do not do, I still learn invaluable strategies and concepts.

I believe the best thing the BiggerPockets community has done for me is to let me help people in the Facebook groups. Every time I explain one of the strategies I use, it cements the concept in my mind. It helps me as much as it helps the person I am assisting.

Is your real estate investing journey similarly inspiring? Share here for a chance to be featured in the next Investor Spotlight!

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    Spencer Gonzaga from Baltimore MD
    Replied 21 days ago
    An inspiring read! Thanks for sharing your story, just goes to show success knows no age! It's all about determination and perseverance. Keep it up!
    Dion McNeeley Rental Property Investor from Tacoma, WA
    Replied 20 days ago
    Thanks, A little hard to share mistakes but hopefully someone else can do it and skip my errors lol.
    James Fraundorf from Seattle, WA
    Replied 21 days ago
    Super encouraging and inspiring story for me to read, Dion. Thank you for sharing!
    Dion McNeeley Rental Property Investor from Tacoma, WA
    Replied 20 days ago
    Thanks, I am hoping more people learn work can be optional.
    Steve Vaughan Rental Property Investor from East Wenatchee, WA
    Replied 21 days ago
    Well done, Dion. Semper FI!
    Dion McNeeley Rental Property Investor from Tacoma, WA
    Replied 20 days ago
    Semper Fi. Thanks. =)
    Michael Cox Rental Property Investor from Philadelphia, PA
    Replied 20 days ago
    This was extremely motivating! Thank you for sharing your story!
    Brea Burger from Allentown PA
    Replied 20 days ago
    great story, love all the details related to your strategy. Thank you for sharing!
    Morgan McClelland Rental Property Investor from Chicago, IL
    Replied 20 days ago
    Thanks for sharing your story Dion. Very inspiring! What are some things you did to help the transition of moving multiple times? I'm assuming you had to move to get the owner-occupancy loans.
    Dion McNeeley Rental Property Investor from Tacoma, WA
    Replied 20 days ago
    Thanks. Kind of got it down to a science. A moving company close to me including tip was $300 After the first move I figured out what we really needed to keep.
    Morgan McClelland Rental Property Investor from Chicago, IL
    Replied 8 days ago
    Makes sense. You probably have a great sense of what's really important in life lol.
    Nikhil Das Nomula
    Replied 20 days ago
    How did you get 5% conventional loan for investment property? I am planning to buy a duplex and they say I need to have 25% down for an investment property
    Dion McNeeley Rental Property Investor from Tacoma, WA
    Replied 20 days ago
    How much required for conventional loans changes almost monthly. And changes based on each lender. This year with covid almost all are requiring 20% for owner occupied and 25% for investment. Let’s see what happens in a few months.
    Christopher Roy Investor from South Hadley, MA
    Replied 20 days ago
    Great story, thanks for sharing. Semper Fi
    Teresa Evans
    Replied 20 days ago
    Awesome share! Thanks so much.
    Amanda Gant from Washington, DC
    Replied 20 days ago
    I never really thought of the prospect of actually paying off a property completely, but that's a great point, and why not do it. I will consider it. I'm at 8 mortgages now, and hope to close on my 9th soon... I had wondered where to go from there.... I was imagining I'd sell a place so i can buy another... but yes, might make sense to pay one down. :-) Again, another concept taken from the community!! Thank you for sharing, it really is inspirational. I've done so many deals in 2020 that my head is reeling, and I do not feel rich, just tired. After I close this one final deal, I'm going to take 2021 easy, and see my cash flow in. (Hopefully!!!!)
    Matt Merrill
    Replied 20 days ago
    Great story! I’ve had several rentals for 13 years and am about to make the big jump to paying them off. It has taken these strange times to force me to change my mental model and value the stable income instead of just reaching for another mortgage. I plan to add more properties later but now I have a strategy..... house hack into them and no more than 3 or 4 mortgages! Semper Fi !
    Demetrius Gi Investor from Stafford, VA
    Replied 20 days ago
    This is a great strategy that you have developed that's works well for you. I'm on the same path of paying off some of our current properties before investing in additional properties. Thanks for sharing. Semper Fidelis!
    Aaron Barber Rental Property Investor from Las Cruces, NM
    Replied 20 days ago
    Congratz and thanks for your service. We have similar investing strategies except that so far I have invested only in SFH. I have looked for multifamily but so far I haven't found any worth buying. They aren't too popular in my area. My goal is to have 10 rentals with 3 or more being paid off. I'm currently at 6 with 1 paid off. Normally I would be more against that debt, but rates are so low now it almost makes more sense just to carry the loans.
    Christopher Stacy Rental Property Investor from Wiesbaden Germany
    Replied 20 days ago
    Dion, great article. Thanks for laying out your strategy. Sent you a connect request. Take care.
    Jack Crouch
    Replied 19 days ago
    Thank you for sharing your story! Great insights and testimonials!
    Bryan Mitchell Rental Property Investor from Columbus, GA
    Replied 19 days ago
    Don, I admire your steady focus on a simple yet effective strategy! And the fact that you’re a single father doing all of this speaks volumes.
    Bill Goodland Rental Property Investor from Allentown PA, United States
    Replied 19 days ago
    Awesome read Dion! I love following your story and you provide a ton of value.
    Daniel S. New to Real Estate from Indianapolis, IN
    Replied 19 days ago
    Great information, sir. I appreciate you sharing your journey!
    Scott Blackwill Investor from Windsor, CO
    Replied 19 days ago
    Oorah Dion! Great read and loved the story which I connected with on multiple levels! I'm also a Marine, dad to 5 kids, 40 y/o, spent the last 14 months reading books, listening to podcasts and being on BP and just recently invested in my first multifamily syndication. I can only hope my real estate journey will mirror some of your same success! Congratulations!
    Brandon Diaz New to Real Estate from New York, NY
    Replied 18 days ago
    Thanks for sharing Dion, especially on your strategy, it was very insightful.
    Bryan Trelegan Rental Property Investor from Hyannis, MA
    Replied 9 days ago
    I am a Big fan of simple and effective strategies. Well done ! Bill Gates has said when he wanted to solve a repetitive and difficult problem he would choose a “ lazy “ guy.