{"id":130525,"date":"2020-10-07T15:03:01","date_gmt":"2020-10-07T21:03:01","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=130525"},"modified":"2021-03-16T17:03:51","modified_gmt":"2021-03-16T23:03:51","slug":"investor-spotlight-dion-mcneeley","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/investor-spotlight-dion-mcneeley","title":{"rendered":"Investor Spotlight: From USMC to FIRE With Just 5 Properties Featuring Dion McNeeley"},"content":{"rendered":"

Dion McNeeley<\/a> started out $89K in the hole. But after reading <\/strong><\/em>Rich Dad Poor Dad<\/strong> and discovering BiggerPockets, he dug himself out of debt and climbed his way to financial freedom inside of eight years\u2014without sacrificing the meals out and vacations he enjoys.\u00a0<\/strong><\/em><\/p>\n

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Name: <\/strong>Dion McNeeley<\/p>\n

Age: <\/strong>50<\/p>\n

Location: <\/strong>From Tacoma to Olympia in Washington State<\/p>\n

What were you doing prior to real estate?<\/h3>\n

I have been a Marine, a cop, and a truck driver\u2014fun jobs, but they don\u2019t pay six figures.<\/p>\n

What got you interested in real estate investing, and how did you get started?<\/h3>\n

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.<\/p>\n

I was 40 and a single dad with three kids. I inherited a ton of debt upon divorcing\u2014to the tune of $89K\u2014that I didn\u2019t even know existed. I found the book Rich Dad Poor Dad<\/a><\/em> and was debt-free in six years. Then, two years later, I reached financial independence. Now, I\u2019ll never have to work again in my life!<\/p>\n

I choose to work because I love my job. But I\u2019ll never \u201chave\u201d to.\u00a0I don\u2019t 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.<\/p>\n

I learned everything I put into practice by consuming every episode of the BiggerPockets podcasts\u2014the Real Estate<\/a> show, Business<\/a> show, Money<\/a> show, and Rookie<\/a> 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.<\/p>\n

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\u2019t be able to help the people I do\u2014for free.<\/p>\n

If I can do this, anyone can. It just takes knowledge and a plan. You got this!<\/p>\n

Related:<\/em><\/strong> Investor Spotlight: $10K per Month in 4 Years & Retired at 31 With Ryan Chaw<\/a><\/em><\/p>\n

What is your real estate investment plan and preferred investing strategy?<\/h3>\n

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.<\/p>\n

I don’t do hard money\u2014there 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.<\/p>\n

When I hit four mortgages, I focus and pay one off. The gap between rental income and mortgage expenses keeps getting wider and wider.<\/p>\n

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.<\/p>\n

I keep a diversified set of tenants\u2014some military, some Section 8, and some retirees. So, a government shutdown, pandemic, or stock market crash doesn\u2019t affect me very much.<\/p>\n

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\u2019t plan on ever selling, so I\u2019m creating generational wealth.<\/p>\n

All of the hard work was in the first two years, learning and getting systems in place. Now, it\u2019s pretty much on autopilot. I spent a total of about 20 hours in 2019 working on real estate.<\/p>\n

Related:<\/em><\/strong> Investor Spotlight: 20 Doors in 2 Years with Tom Shallcross<\/a><\/em><\/p>\n

How much did you have to invest when you first started?<\/h3>\n

I had $20K. My first investment property was a duplex with 5% down conventional.<\/p>\n

Tell us about your first deal.<\/h3>\n

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.<\/p>\n

To be honest, that was the worst tenant I have ever had\u2014it 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.<\/p>\n

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).<\/p>\n

How many deals have you done to date?<\/h3>\n

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.<\/p>\n

What is the most important part of a deal for you?<\/h3>\n

I analyze cash flow<\/a> to decide if I should take a deeper look. Then, I consider location and condition.<\/p>\n

How do you know if a property fits your goals?<\/h3>\n

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.<\/p>\n

Related:<\/em><\/strong> How to Calculate Cash-on-Cash Return (Made Easy!)<\/a><\/em><\/p>\n

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:<\/p>\n