From USMC to FIRE With Just 5 Properties Featuring Dion McNeeley

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!

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.

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.

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.

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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.