Real Estate Investor Explains How to Build Long Term Wealth – Business Insider
- Dion McNeeley went from living paycheck-to-paycheck to achieving financial independence.
- He says the ‘income snowball’ helped him build long-term wealth.
- Anyone can watch their income snowball if they follow three steps, he said.
It took Dion McNeeley two years to save up for his first investment property.
At the time, the 51-year old father of three was making $17 an hour working at a commercial-truck-driving school in western Washington and living paycheck to paycheck. He’d never had more than $1,000 in his bank account.
McNeeley put in overtime hours at work and lived frugally until he had about $20,000 in savings, which ended up being enough for a down payment on a $300,000 duplex that he purchased in the Tacoma area in 2013.
After closing on his first investment property, it took McNeeley another two years to save up for the next investment purchase, which ended up being another duplex that he bought in 2015. At this rate, he figured he’d be able to buy a building every other year, and set an ambitious goal of acquiring five investment properties within 10 years.
McNeeley was able to speed that timeline up, however, thanks to what he calls the “income snowball.” It’s a phenomenon that started to kick in during his fifth year of investing in real estate. He gradually started earning more — from his growing rental income and through a promotion at work — while maintaining the same spending habits, meaning that he was able to save more and invest his extra savings into additional real estate acquisitions.
“As you acquire cash-flowing assets, it becomes easier to acquire cash-flowing assets,” said McNeeley, who currently owns 16 units across seven properties. He earns six-figure profits from rental income each year and considers himself financially independent. Insider verified McNeeley’s assets under management with documentation.
The income snowball takes time, however. “It isn’t a ‘get rich quick’ strategy,” he emphasized. “It’s ‘get wealthy for sure.'”
But anyone can watch their income snowball if they follow three steps, he said:
1. Trade down on housing if and when possible. First things first, reign in your spending, said McNeeley. Rather than cutting out the small stuff, like your daily coffee, focus on trimming your major expenses, like housing and transportation.
He reduced his housing costs by buying multi-family homes, living in one unit, and renting out the others. The first investment property he purchased was a duplex. He moved into one half and rented out the other, which allowed him to save significantly. He went from paying $1,500 per month in rent to paying just $300 to live in his own home, since rental income from the other half of the …….