Buying ONE Rental Changed My Life: 4 Years Later, I Quit My Job

Summary

BiggerPockets Real Estate Podcast Summary

Episode: Buying ONE Rental Changed My Life: 4 Years Later, I Quit My Job
Release Date: April 7, 2025
Host: Dave Meyer
Guest: Deondra McDonald

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1. Introduction and Guest Background

In this compelling episode of the BiggerPockets Real Estate Podcast, host Dave Meyer welcomes Deondra McDonald, an inspiring real estate investor from Charlottesville, Central Virginia. Deondra shares her transformative journey from purchasing her first rental property with a modest investment to building a substantial real estate portfolio that enabled her to leave her teaching career and pursue real estate full-time.

2. Overcoming Initial Hurdles: The First Rejection

Deondra's journey began with a single $85,000 house, purchased with just $4,000 in cash. However, her path was not without obstacles. Early on, she faced a hard rejection from her first lender.

Deondra McDonald [02:44]:
"It was a no for so many reasons... I did not have a full-time job. I had just graduated college, I had not gotten a job in my field quite yet and I was stringing together a bunch of part-time gigs. So my income was just too low."

The rejection stemmed from multiple factors: lack of stable income, high debt, negative net worth, and poor credit. Deondra describes her financial state post-college as being "negative $35,000, negative $40,000," compounded by student loans and an underwater car loan.

3. Building a Strong Financial Foundation

Determined to overcome these setbacks, Deondra committed two years to strengthening her financial position. She immersed herself in BiggerPockets resources, reading books and engaging in forums to educate herself about real estate investing.

Deondra McDonald [04:44]:
"It took two years of continuously buying those BiggerPockets books. So keeping it fresh in my brain, I mean truly, like I have to read this because I have to feel like there is something worth fighting for because this is really hard."

During this period, she secured a full-time job and maintained a part-time role to stabilize her income. Simultaneously, she diligently paid down credit card debt, improving her credit score incrementally.

4. First Property Acquisition: House Hacking Success

After two years of preparation, Deondra successfully secured a loan and purchased her first property—a two-bedroom townhouse listed at approximately $3,800 down. Her strategy involved house hacking: living in one bedroom while renting out the other to a roommate, effectively offsetting her mortgage costs.

Deondra McDonald [06:57]:
"I moved in, I took the smaller room and I rented out the second room to a roommate, which covered my mortgage."

This initial success not only provided financial relief but also ignited her passion for real estate investing.

5. Scaling Up: From House Hacking to Multifamily Investments

Encouraged by her first deal, Deondra continued to house hack, acquiring multiple properties over the next few years. By leveraging the income from her rentals, she systematically expanded her portfolio without altering her lifestyle significantly.

Deondra McDonald [09:31]:
"Now instead of saving $3,000, I can save a lot more per month. I took out HELOCs as I would shift from place to place. All that money just kept being saved and going to the next property."

Her disciplined approach allowed her to accumulate 15 units within five years, enabling her to transition from her teaching job to full-time real estate investing.

6. Exploring Niche Strategies: Motel Conversions

Seeking further growth and stability, Deondra ventured into multifamily investments by converting motels into apartment units. This move was influenced by her husband's desire for a more stable and family-friendly living situation without the complexities of managing multiple roommates.

Deondra McDonald [17:12]:
"If I can make more money and not live there, then we can do this in the next year or two. Which is why I considered mid-term rentals and why I considered short-term rentals."

Her first significant project involved purchasing a suite-style motel listed at $160,000. Deondra undertook extensive renovations herself, learning through resources like YouTube and reinvesting rental income to cover contracting costs.

Deondra McDonald [23:06]:
"I started paying for it myself. Deondra and YouTube also got to be real good friends because they were already suite style."

This hands-on experience not only diversified her portfolio but also enhanced her project management and renovation skills.

7. Current Portfolio and Future Goals

As of the episode's release, Deondra manages a portfolio of approximately 30 units. Her strategic focus has shifted towards achieving debt freedom by the age of 40, encompassing both business and personal debts, including mortgages.

Deondra McDonald [31:20]:
"I am trying to be debt-free by 40. I don't want business debt. I don't want personal debt. I would like done."

Looking ahead, Deondra is exploring opportunities in assisted living facilities, leveraging her expertise in motel conversions to tap into this growing market without directly managing operations.

8. Insights and Lessons Learned

Deondra's story underscores the importance of perseverance, education, and strategic financial planning in real estate investing. Key takeaways include:

• Persistence Pays Off: Overcoming initial failures and lender rejections through continuous learning and financial improvement.

• Strategic House Hacking: Utilizing house hacking not just for cost savings but as a stepping stone to larger investments.

• Niche Exploration: Venturing into specialized markets like motel conversions can unlock new opportunities and portfolio diversification.

• Work-Life Balance: Balancing active property management with personal life priorities is crucial for sustainable growth.

Deondra McDonald [34:51]:
"Almost like if you feel comfortable building, then this will be something that is right up your alley. Yeah, right. But if you've never built a property and those skill sets will be really helpful here."

Conclusion

Deondra McDonald's journey from a financially constrained graduate to a successful real estate investor exemplifies the transformative potential of real estate investing. Her methodical approach, resilience in the face of challenges, and willingness to explore innovative strategies provide valuable lessons for aspiring investors seeking financial freedom through property investment.

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Notable Quotes:

• Dave Meyer [00:00]: "Just buy one house."

• Deondra McDonald [02:44]: "It was a no for so many reasons... I did not have a full-time job."

• Diandra McDonald [04:01]: "Having a negative net worth is actually pretty common... you could still get started in real estate."

• Deondra McDonald [06:57]: "I moved in, I took the smaller room and I rented out the second room to a roommate, which covered my mortgage."

• Deondra McDonald [17:12]: "If I can make more money and not live there, then we can do this in the next year or two."

• Deondra McDonald [31:20]: "I am trying to be debt-free by 40."

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This episode serves as an inspiring blueprint for those looking to embark on or scale their real estate investing journey, highlighting that with determination and the right strategies, financial independence is attainable.

Transcript

[Dave Meyer]

Just buy one house.

[Diandra McDonald]

That's really all it takes to start your real estate investing journey and potentially change your entire life.

[Dave Meyer]

Today's guest bought her first home with.

[Diandra McDonald]

Just $4,000 in cash and she lived.

[Dave Meyer]

There with roommates to offset her mortgage costs.

[Diandra McDonald]

Then within five years, she had acquired a 10 unit apartment building and had left her teaching job to pursue real estate full time. What's up everyone? It's Dav. Dave Meyer, head of real estate investing here at BiggerPockets. And today on the BiggerPockets podcast, we have an investor story featuring Diandra McDonald. Dhandra is going to tell us about her real estate investing career in central Virginia, which started with just a single $85,000 house and has grown steadily into a truly life changing portfolio. We're going to talk about the steps she took to get her finances in order after she got a hard no from the first lender. She approached how she leveled up to larger properties by converting a motel, and why she's not actually looking to grow her portfolio any larger than its current size. This conversation is, to me at least, a great example of the persistence and patience it takes to build a great real estate portfolio and how your first step towards financial freedom is often the most important one. Let's bring on Deondra Diondra. Welcome to the BiggerPockets podcast. Thanks so much for being here.

[Deondra McDonald]

Hi. Absolutely. This is really, really exciting. As someone who for their first property 12 years ago signed up for Bigger Pockets, hoping to learn. This is like this full circle moment is truly crazy.

[Diandra McDonald]

Was that what, 2013 you got started? So what were you doing back then?

[Deondra McDonald]

Probably about 2014. Oh, I was dreaming. That's what I was doing. I said, well, let me get ahead of the game. I'm ready to buy a house tomorrow. Let me get on this platform so I can learn. Was subsequently shut down by my lender. Like, hey, you are in no way qualified to buy property. So I was still on Bigger Pockets. I said, well, still going to read the books. I'm still going to read the forums as much as I can as I prep to be an investor. Maybe a year or two from them.

[Diandra McDonald]

Oh, wow. So how far in the process did you get before contacting a lender?

[Deondra McDonald]

All I had truly was a dream. I think I had finished. Maybe as I was closing Rich dad, poor dad for the first time. I said, understood, I will do it. I'm ready to go. Next day, called a lender. Big fan of talking to professionals who are being paid by somebody else. Can't get enough of it. I am going to get up immediately. That lender is being paid by the bank. Right. That's why they sit in that seat. So I'm happy to go talk to them because they don't get paid based on me closing. And I set up a bigger pockets because it didn't even cross my mind that they would say no. I was like, oh, it might not be a high amount.

[Diandra McDonald]

Yeah, right.

[Deondra McDonald]

It might not be extensive. But they're not going to say no. They're just going to say a little less.

[Diandra McDonald]

But they said no.

[Deondra McDonald]

Yeah.

[Diandra McDonald]

So do you mind sharing with us why they said no? Why? Like why the. Just hard no.

[Deondra McDonald]

It was a no for so many reasons. And sometimes people like, oh, it was a conditional. This was not a conditional. If you just do these things. It was a no. It was a no because I did not have a full time job. I had just graduated college, I had not gotten a job in my field quite yet and I was stringing together a bunch of part time gigs. So my income was just too low. It was a no because my debt was too high. Or when I graduated, my net worth was super negative.

[Diandra McDonald]

Oh, right.

[Deondra McDonald]

I owned no assets. I had a car that I was underwater on because I rolled all the fees into the loan and I had student loan debt. So I came out of college negative $35,000, negative $40,000. That also should lead you to know my credit wasn't great.

[Diandra McDonald]

Yeah.

[Deondra McDonald]

So I mean, like every single part of the application, I didn't have the money, I didn't have the savings. I had terrible credit. I had a load net worth. There was nothing she could do. There was no small tweak. Which meant the overall answer was no. But I am lucky because she did give me like this is what you need to do if you want to get qualified.

[Diandra McDonald]

I think that is a really common place for people to start. Just so you know, like, having a negative net worth is actually pretty common, especially if you have student loans or, you know, car debt or something like that. You can, if you have positive cash flow, if you're saving a lot more money than you're spending every single month, you could still get started in real estate. But if you don't have either, that's a tough spot. Like it sounds like that's where you were, where you didn't have a positive savings rate or a positive net worth. And that means you sort of have to take a step back and build sort of a stronger financial foundation before you can take out a loan. So how did you Go about that. What did they tell you you needed to do and how long did it take?

[Deondra McDonald]

It took two years. It took two years of continuously buying those bigger pockets books. So keeping it fresh in my brain, I mean truly, like I have to read this because I have to feel like there is something worth fighting for because this is really hard. It's not just like, oh, I didn't get a job just because I wasn't getting a job because I wasn't as qualified as the other applicants for, for example. And so for one of the things I had to fix being my income, that was really difficult. It still took me after I applied, it took me another four months to get my first full time salary job. And even that wasn't enough for the area I was trying to live in. She said if you want, if you want to live here, you need to keep your part time job because we can count that income because you've been doing lifeguarding for so long. It still counts, but only if you keep it. So now I'm working Monday through Friday at the lab and I'm teaching or lifeguarding Saturday or Sunday at the pool, hoping that I could close so I could finally quit one of these jobs. But that's what it took. It took me having to pay off my credit card debt. So taking or keeping that second job also, that's where the money went, right? Just every month paying a little extra to the credit cards, even if it was $30, even if it was $40, it brought it down. My score would come up a point or two and I was that much closer to getting to that minimum threshold to get the loan that I wanted and I had to save.

[Diandra McDonald]

It is hard. And two years does it is a long time. And it's a long time. I think in the grand scheme of things it's actually not. But to keep up that motivation level, like you were saying, it's, it's a lot to have to sacrifice and put in all that work without that tangible benefit for so long. But honestly, this is a really common way of doing it. I know a lot of people look for private money or sub 2 or no money down ways to do it. And those are fine, those are totally acceptable ways to do it. But what you, you did is just kind of the old school way of going about it. It's just, you know, earning more and saving more and just sort of chipping away at it over time. And it sounds like eventually you got.

[Dave Meyer]

There after two years.

[Diandra McDonald]

So yeah. Congratulations. That's awesome. Thank you Tell us, what did you buy? Because you said you wanted to live in it. Were you looking for a house hack kind of situation?

[Deondra McDonald]

Exactly, because that's all I had. With all that savings, the extra two years, I still could come up with about $5,000 because I had to pay down the credit card debt and just live like that was also a necessity. But my first purch, a two bedroom townhouse, just half a duplex, where the plan was just to lower my rent. But what actually happened was I moved in, I took the smaller room and I rented out the second room to a roommate, which covered my mortgage. And that started the full addiction to this whole process of like, oh, I see. Okay. Yeah, yeah.

[Diandra McDonald]

I would imagine that generating that income or saving that money was a lot easier than lifeguarding partners.

[Dave Meyer]

Yeah.

[Diandra McDonald]

So, like, you didn't get to quit your job fully. Right. I imagine you were still working full time, but like, sounds like at least improve your quality of life just off that first deal, right?

[Deondra McDonald]

Yeah. Even just I got to stop lifeguarding. Yeah, even just that, like, I had weekends again. I had a day off that I wasn't thinking about, how can I pick up an extra shift? How can I make an extra $20 this weekend? Because that adds to the pot. I could rest. So even if it was just that, my goodness.

[Diandra McDonald]

I think this is so important because I think in this industry, a lot of the focus has been turned to just like quitting job. But I love hearing stories like yours where you show that every incremental deal can improve your financial situation and can improve, like you're saying, your quality of life. Like you actually had this tangible benefit to your life just by buying a single real estate deal. And I really encourage everyone, maybe if you haven't gotten that first deal yet, to think about that because it's a lot less daunting to think about how do I replace my full W2 job? It's like, well, just think about how, you know, can you work a little bit less? We'll give you a little bit more peace of mind just to get that first deal. It sounds like you did that, but then you got the bug. So what did you do after your first house hack?

[Deondra McDonald]

I kept house hacking for a while. Right. I got a better job where I was making more money, but didn't change my lifestyle. And so every year on the dot, we used to have a joke that I have boxes I didn't even bother unpacking because it was like, I'm going to. I'm going to be gone In a year. Because now I have this system in like, oh, I live here for a year. I rent a while I'm here, I rent. When I leave, all that extra money goes into the next property. So every property is bigger, better, more efficient than the last one. I can fix stuff up as I go. For years is just what I focused on.

[Diandra McDonald]

What area of the country is this?

[Deondra McDonald]

I'm in central Virginia, specifically Charlottesville.

[Diandra McDonald]

Okay. And it sounds like that first deal. Did you just put in five grand? Was that all you had to come up with?

[Deondra McDonald]

I think we looked at the numbers. I wound up being like $3,800. Yeah.

[Diandra McDonald]

Oh, my God, that's amazing. And so everyone listening. This is jealous. But just as a reminder, back then, it was a lot harder to get a loan to. As Deandra mentioned, you know, there are trade offs to every time.

[Dave Meyer]

So was that sort of the amount.

[Diandra McDonald]

You were shooting to save every single year? Like, could you repeat the strategy you were using just saving up $3,800 $5,000 a year and buying something new?

[Deondra McDonald]

Exactly. It was like, hey, there is an abundance of properties here under $150,000. Right. I remember are different. Like Dave is saying. I remember having a $200,000 budget and being picky. Yeah, right. Go in and say, like, I don't like those cabinets. Show me something else. I don't like the wall colors. And that was okay because you had other options. And I want to say this, in certain parts of my state, that is still very true. Right. My. My area has gotten very, very popular. It got very, very popular after the world kind of shut down in 2020. But it wasn't that popular six years ago where it was still like you had options. And there are surrounding counties and surrounding cities where there are still plenty of options if you were to walk in right now with $200,000 and a desire to live there. But yeah, what happened was I was paying 700amonth in rent, so I went from paying 700amonth of rent to nothing. So all I did was save that money.

[Diandra McDonald]

Yeah.

[Deondra McDonald]

So now Instead of saving 3,000, I can save a lot more per month. I took out HELOCs as I would shift from place to place. I got my Airbnb would do well. All that money just kept being SA and going to the next property.

[Diandra McDonald]

And how long were you doing house hack and when did you start doing something else?

[Deondra McDonald]

I was house hacking exclusively for about three years. On year four is when I started experimenting with midterm and short term because I had duplexes or I had quads that sometimes I would have two or three months between when this tenant ended and the next tenant who wants to come starts. So what do I do in this time frame? Oh, I could rent to a traveling nurse for two months or put it on short term rentals that have some extra furniture and like, oh, this is great, I can play with all of these whenever I need them instead of sticking to one thing.

[Diandra McDonald]

All right, well, I want to hear more about your foray into other strategies, but we do have to take a quick break. We'll be right back.

[Dave Meyer]

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[Diandra McDonald]

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[Diandra McDonald]

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[Diandra McDonald]

Everyone. Welcome Back to the BiggerPockets podcast. We're here with Theondra McDonald talking about how she has hacked what, three or four times? It sounds like.

[Deondra McDonald]

Yeah.

[Diandra McDonald]

And then started branching out. So tell us a little bit about just the strategy for branching out because I think this is one of the sort of the critical points where people struggle to try and figure out, you know, you've done this owner occupied strategy. There's a lot of benefits to that. But then when you start doing other things, you need a little bit more capital, you need a little bit more time. So how are you thinking about scaling your portfolio?

[Deondra McDonald]

It's not that I'm ashamed to say it, but I will say there was a big external factor that made me stop house hacking and that was my husband. He was over it, right? It was like, I don't want to do this anymore because I tell you what, it was working for what I knew I was making or bringing home $3,000 per month when I finally switched to teaching full time. And so to me I'm like, that's five or six house hacks. And he said he was done, right? He did not want to have roommates anymore. He wanted to be more stable. He wants to think about a family And I said, okay, I guess that makes sense.

[Diandra McDonald]

Did you do it together for all four years? Like when you were moving all those times?

[Deondra McDonald]

He came in year three.

[Diandra McDonald]

Oh, he got it easy.

[Deondra McDonald]

That's what I'm saying. That's what I'm trying to say, Dave. Two years in, he was ready to tap out.

[Diandra McDonald]

Yeah, yeah. You did all the work. No, but understandable. House hacking works time and place. With the right property, I think you could do it at almost every phase of life. But the roommate thing, I get that there's sort of like a. There's like a limit to how long people want to do that.

[Deondra McDonald]

Yes. But that shifted because I wasn't retired yet. Right. I wasn't able to step away full time from teaching. That was something I wanted the option to. If we decided to have children. Right. As a teacher, you're already playing that game of like, I'm trying to give birth the day the students go home. So I could be home for, like, paid maternity leave for the entire summer. But I wanted the option to stay home, if that felt right. But we weren't there financially quite yet, so that turned my eyes to multifamily. Right. If I can make more money and not live there, then we can do this in the next year or two. Which is why I considered mid term rentals and why I considered short term rentals. Because the profit margin was higher. I had the time, I was willing to put the effort in. I just needed something to make a little more money a little faster, which is why I went to short term rentals and then started flipping properties.

[Diandra McDonald]

Oh, wow, cool. So tell us about it. Because you said multifamily and short term rental. Did you do those at the same time?

[Deondra McDonald]

Yes. So I had bought a duplex as a primary residence. I use my FHA loan. And when that tenant moved out, it was this push and pull between. So what do we do with this property? Right. I have all of this furniture that has been moving, like, house to house. Right. This is the Craigslist, like, boom. And you can get all this stuff. So I said, okay, well, what if we just rent it furnished? That gives us the flexibility for a family to be like, hey, we're almost fully furnished, unless you want to just bring in a couple of mattresses. And if not, we can dump our mattress in there for short term rental if that's what we get. And by playing with that, I realized short term rentals do super. Well, a little difficult for three or four bedrooms as a full teacher who had to clean all that stuff. So I shifted my short term rentals to my condos and kept the town houses, the big homes, long term rentals. Because it was a little easier.

[Diandra McDonald]

Because you were doing it all yourself.

[Deondra McDonald]

I was doing it all myself. I sometimes I look back. So that first property we're Talking about was 10 years ago this May, and I look back and say, DeAndre, you would wake up at 5am to clean the Airbnb, go teach from 8 to 4, come back to deal with a clogged toilet at a long term rental. My truly when now I can't go four hours without a nap. I'm like, oh my gosh, sit down.

[Diandra McDonald]

You've got soft.

[Deondra McDonald]

So soft the way it used to be. But that's what that, that energy partly fostered by y'all platform. People are retiring, man. Like people are getting what they want. If I can stay with it long enough.

[Diandra McDonald]

That must have been super hard to have that really rigid schedule. A stressful job and doing it at night. How long did you do that for?

[Deondra McDonald]

That was my entire teaching career, so four years.

[Diandra McDonald]

Oh, wow.

[Deondra McDonald]

Yeah. And it's, it was stressful. Even getting phone calls from tenants while I'm like proctoring a test. Right. Because they have needs. In the middle of the day, you're doing something else. You know what else is stressful is the, the Airbnb person's showing up regardless if you're ready or not. Yeah, right, Right. And that you can't delay the opening because you got caught up helping a student after school. Which is why I had to do it at the crack of dawn because that was the only time I had extra.

[Diandra McDonald]

Right.

[Deondra McDonald]

It was wild.

[Diandra McDonald]

Yeah. But it sounds like worth it.

[Deondra McDonald]

Oh, for sure.

[Diandra McDonald]

Yeah. I mean, I think this is, this is just the reality of, of hustling your way. If you're not starting in a place where you have a ton of money or you have systems set out, like you kind of just have to hustle your way into it or go slower. I guess those are kind of the trade offs. Like you can scale a little bit slower or you put in a lot of time and effort and are able to. It sounds like you quit your job in just four years, is that right?

[Deondra McDonald]

Yeah, well, five with the first year working somewhere else. But five years total.

[Diandra McDonald]

All right, well, we'll round down to four because I think that it's pretty impressive either way. So like, how many, how many units did you have at that point?

[Deondra McDonald]

15.

[Diandra McDonald]

Wow.

[Dave Meyer]

Okay.

[Diandra McDonald]

And so you had done a couple time on home. Sounds like condos. Duplex. At some point, did you just buy one bigger unit or anything like that?

[Deondra McDonald]

Yes. So that was the big shift is when my husband said, no, we have to get to multifamily. So I looked at my portfolio. I saw what would performing well, I saw what had a lot of equity and I said, I want to go big. I want to do my first big property. I don't want to do quads anymore. We're not house backing. So I'm not restricted to that one to four unit world that I used to be in. And I had big goals. My budget is $200,000 and I want a 10 unit and I wanted to make $2,000 a month. Oh, I said full confidence, remember?

[Diandra McDonald]

Wait, the building was going to cost 200? Yep. Not your down payment. Okay. All right, let's hear how this went.

[Deondra McDonald]

It was that same confidence that had me showing up to a lender's office with no full time job and no savings and terrible credit and no positive savings goals. Right. But that's what I said. And I could not invest in central Virginia anymore. Surprise, surprise, not at that price point. And so I'd expanded my search about three hours from my front door and said I'm open to whatever shows up. And for months I looked and looked. My realtor looked and looked and we didn't find anything. And so one day this like motel on the side of the interstate showed up. And I was like, well, what's this?

[Diandra McDonald]

I don't know where this story is going, but I would have had the exact opposite reaction. I would have been like, absolutely not. Why are you sending me a motel side of the highway?

[Deondra McDonald]

But so it pops up, it's listed for like $200,000. And I say, well, it's under budget or it's in budget, it's operating. Could these be apartments? Can I do something with this? What does this look like? And I showed up and they were suite style. Oh, so they already had the kitchen inside or they had the plumbing for it. Some needed some work, but there was 10 units in an office parking meter.

[Dave Meyer]

Like I was like, oh, and under.

[Deondra McDonald]

200 grand and under $200,000. So I went to my lender, they said, no more money. I get told no a lot.

[Diandra McDonald]

This is a theme.

[Deondra McDonald]

Yeah, that's right, that's right. So I wound up selling a couple of my short term rentals because they were doing super well. So I was able to sell them like as a business and not just as a property, which made me look really good to the other investors. Buying them. And I went back four months later, no one else had bought it, and I placed an offer, and I got that property, that first one for 160 grand.

[Diandra McDonald]

Wow.

[Deondra McDonald]

10 units with the commercial space. And that's when I said, oh, I can leave.

[Diandra McDonald]

Yeah, that was enough. That one deal. Wow.

[Deondra McDonald]

Yeah. Between that and the other rentals I had, I'm. I'm good now. Didn't know about renovations.

[Diandra McDonald]

Yeah. I was just gonna say, you don't just have a motel that magically becomes rental units. Tell us a little bit about it. Actually, let's just start with how big of a scope of renovations did you have to do, and were you able to get any funding for that, or did you have to come out of pocket for it?

[Deondra McDonald]

I didn't know how to get funding. Right. Because I'm a big. Just you show up and start trying stuff. Didn't even know that was an option to get funding. Should have.

[Diandra McDonald]

Right.

[Deondra McDonald]

But I just started paying for it myself. Me and YouTube also got to be real good friends because they were already sweet style. And the zoning, the change was easy enough to make with the going to the lady and asking, like, how do I make this change? And so a lot of it was, how do I just make this prettier? How do I install cabinets by myself? How do I put down flooring? What does drywall look like? And the ones I could do on my own, I did and got rented. And the money from those helped me pay for a contract to do the ones I couldn't.

[Diandra McDonald]

Okay, nice. Wow. And so how long did that wind up taking?

[Deondra McDonald]

About nine months, all in all.

[Dave Meyer]

All right, well, I want to catch up on what you've been up to.

[Diandra McDonald]

Since COVID and what your portfolio looks like today. But we're going to take a quick break. Stick with us.

[Dave Meyer]

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[Diandra McDonald]

Everyone. Welcome back to the BiggerPockets podcast. We're here with Deondra McDonald talking about her motel conversion, which is pretty cool. What's happened since then? Are you doing some more of these sort of creative projects or what have you been up to since?

[Deondra McDonald]

Oh, I love a motel.

[Dave Meyer]

Oh, really?

[Deondra McDonald]

Oh, yeah. So I kind of stuck with that for the next couple of years. You'd be surprised at how many motels are looking for buyers. And now that I know, it's actually better to just raise the money to fix it first. Don't try to do the drywall yourself, Deandra. The process goes a lot faster. Planned out in the beginning.

[Diandra McDonald]

Yeah.

[Deondra McDonald]

So for the last about four years, that has been my primary focus is buying motels, keeping some, selling some, that kind of thing.

[Diandra McDonald]

How many have you done?

[Deondra McDonald]

I have done three in total.

[Dave Meyer]

Oh, that's awesome.

[Diandra McDonald]

And so what is your process? Tell me a little bit about this. I don't even know where I would start if I was looking for a hotel. A motel. Excuse me. Like, does your agent look for them? Do you find these yourself? Are you going off market?

[Deondra McDonald]

A little bit of both. So something I have learned is most motel owners own multiple motels, and so that's getting in with a person or two who is looking to downsize or get rid of them has been really, really helpful to get multiple deals done, either for myself or for some of my clients. But looking at some regular MLS sites, they'll post them there, Any commercial sites, but it is highly, highly county specific, unfortunately.

[Diandra McDonald]

Okay.

[Deondra McDonald]

There's no, like, centralized space. Also just making some blind offers. You can look at motels and just see how they're doing, step in and say, hey, I want to Buy it from you? What would you be willing to do? Those are nice because they're already operating and their only difficulty is the zoning. Sometimes they even come with the furniture or come with the stuff in place. I just have to make sure I'm legally allowed to rent it for longer than 30 days at a given time if it needs work. If it needs conversion, I like to try to find suite style if possible. If not, the rooms just have to be large enough that a kitchenette could fit okay.

[Diandra McDonald]

So suite style just means you have kitchen. Yeah, yeah.

[Deondra McDonald]

But typically studios are one bedrooms and that conversion is not that difficult when you already have the water or already have the setup.

[Diandra McDonald]

And what do you look for in, in a motel? Like, you know, the layout sounds super important, but beyond that, is it really all that different than updating, renovating, an existing multifamily?

[Deondra McDonald]

No, I think the biggest is the zoning, which is going to be different from a multi family that exists already. There might be some confusion with splitting utilities because that's not already done or you just have to eat it. And sometimes it's like it's cheaper for me to just pay elect. It's just not worth the separation of it or the separation of water per unit. But I think it's just a market that people weren't thinking about long term because they're often priced as a business and not a property. The hardest part is convincing the seller that I'm just buying your property, I'm not buying the business, you have to just sell me the asset, not the corporation behind it.

[Diandra McDonald]

And I guess so the benefit then is what is it just you get a better price point often.

[Deondra McDonald]

Yeah.

[Diandra McDonald]

That's awesome. Wow. It's just that easy, I guess.

[Deondra McDonald]

Yeah. And some of it there is a layout aspect of like the commercial space that the offices that come with it mean I have built in storage, mean I have a built in space for laundry. If it's large enough, I can have the handyman. The design makes it a lot easier for my handyman or my contractors to do work on the entire building because that's how they were designed. It was not designed as a bunch of smaller condos trying to work together. It has one horizon beat. Right. It has one central space to control all of that. That has been fantastic to you.

[Diandra McDonald]

Oh, that's really cool. Awesome. I really like that. So you said that you're doing this still, you're keeping some, you're selling some. What? You know, you talked a little bit about your, your strategy and how sort of family and Your husband's personal preferences sort of changed your strategy. What's your strategy now? Like, what are you trying to accomplish these days?

[Deondra McDonald]

I am trying to be debt free by 40. Oh, I don't want business debt. I don't want personal debt. I would like done.

[Diandra McDonald]

Does that include mortgage debt?

[Deondra McDonald]

Yes, that includes all. I like that. So right now I'm sitting at about 30 units and I'll probably stay here. This is about as tapped as me and my team want to do. So everything else will be just a flip to pay down the debt on what we have so far.

[Diandra McDonald]

That's a very cool goal. I like that a lot.

[Deondra McDonald]

Thank you.

[Diandra McDonald]

So it sounds like, you know, I don't know if you know Chad Carson. Yes, Coach Carson. Yeah. He talks a lot about sort of like shifting from this growth mentality to sort of like, you know, reaping what you've sown over the last, last. Sounds like 10, 10 or so years. So do you feel like you're sort of in that like you're still flipping houses, you know, flipping motels, it sounds like. And doing stuff, but sort of trying to transition to more of a passive and probably. It sounds like lower risk type of portfolio.

[Deondra McDonald]

Exactly. And one of the things my husband. I've been really good about is making sure our lifestyles don't bloom too much past a comfortable salary that we could both still make if this all went away or something happened along those lines. But that's even more comfortable when there's no debt.

[Diandra McDonald]

Yeah, right.

[Deondra McDonald]

When things are a little more unstable. Having 20, 25 units is plenty when you don't have any bills. So that's what I'm transitioning to.

[Diandra McDonald]

And I would imagine flipping these motels is probably pretty lucrative because you're doing the creative part and then there's probably.

[Dave Meyer]

A ton of investors like me.

[Diandra McDonald]

I would want to buy something like that once you did all the hard work.

[Deondra McDonald]

And then some of them I'm saving in the portfolio with seller financing deals because I have time.

[Diandra McDonald]

Oh, cool.

[Deondra McDonald]

I'm happy to do a 20 year note because we already pay for it right where the down payment needs to cover my initial investment, which is really nice. But I've done a few of those as well. Of like, hey, I'm happy to finance $500,000 for you over 20 years because that adds to our portfolio without me having tenants. And I know the property y. So something happens. I'm getting the asset I worked on back.

[Diandra McDonald]

Yes, that's a really good point. For sure. So, I mean, this is A really cool, interesting niche because it's, you know, it sounds sort of complicated at first. At least that was my initial reaction. Where you're like, I found a motel on the side of the street. Like, where is this going? But then it just makes total sense. I'm curious, do you think that there's a certain type of investor that this strategy or niche works better for? Is this something most anyone could consider?

[Deondra McDonald]

I think it's something anyone could consider. I do think it could work best for the person who wants to be a little more hands on. Right. If you've ever changed zoning, if you've ever even walked into a zoning office, this is not the fast part of the county office building. These are. We are still pulling out paper blueprints. We are still like getting original maps of the county. This is a slow process to get all the paperwork in order, especially if you have to pull permits. It can take six to eight months of planning to even get started.

[Diandra McDonald]

Okay.

[Deondra McDonald]

I like to put as much of that possible in survey and not in my ownership portion of it, but someone who's willing to do that, to do. A little slow at the beginning, but then once you're going, you're going. Because just like any other apartment building, these are not complicated or niche like fixes. You just need permission from the right people.

[Diandra McDonald]

Absolutely. Okay, that's. That's a really good standout because you need to have the time and sort of. It sounds like a bit of project management expertise and discipline to see this through and sort of just like, like stay on time, keep a schedule and try and push the project through sort of continuously.

[Deondra McDonald]

Almost like if you feel comfortable building, then this will be something that is right up your alley. Yeah, right. But if you've never built a property and those skill sets will be really helpful here.

[Diandra McDonald]

Well, this has been a very fun conversation. Diandra, I'm curious before we leave, what are you looking forward to? Like, what. Are there any projects that you have coming up or any ideas or things that are getting you excited these days?

[Deondra McDonald]

So as much as I'm trying to be debt free in the next like six to seven years, I am very, very interested in assisted living. I also think the larger motels are perfect for that. I have stayed away from the big guys.

[Diandra McDonald]

How big is a big motel?

[Deondra McDonald]

To me, the big motel is the 50, 80 unit properties.

[Diandra McDonald]

Okay, yeah, that's big.

[Deondra McDonald]

I tend to stick that 10 to 20, 25 range, but in my mind it's just the perfect setup. You have these individual spaces, a lot of Them are one level. They're already ADA accessible. You have the central grounds. Even if you wanted the upstairs people, that could be for staff or people visiting. It just feels like an easy lift.

[Diandra McDonald]

I like that.

[Deondra McDonald]

Right. I think make sure all my stuff is super good, but I could see if I am not debt free by 40, it's because I bought.

[Diandra McDonald]

You lost your discipline. Yeah. Yeah, for sure. I get that. I know that makes a lot of sense just from like a trend perspective. So many people come on the show and say assisted living and it makes so much sense.

[Deondra McDonald]

Yeah.

[Diandra McDonald]

I haven't really heard anyone who's like, nailed it yet. It just seems the operations are tough to scale and rightfully so. It's an important service that you're providing and, you know, you need to be thoughtful about how you do it. But I. I think that it is ripe for opportunity to provide a valuable service and to earn, you know, a solid profit at the same time. So if. If you figure it out, let me know.

[Deondra McDonald]

Yeah. And for me, part of it is like, I'm not trying to run the facility.

[Dave Meyer]

Right.

[Deondra McDonald]

Right. My job is to get the property. There's gotta be some company out here who just wants to lease the space. I don't want to run it.

[Dave Meyer]

True.

[Diandra McDonald]

Yeah. You could do the flipping strategy. You could just prep it, basically. Do all the entitlement and all that. Yeah, that'd be cool. Well, thank you so much for joining us. We really appreciate your time. This has been a lot of fun.

[Deondra McDonald]

Thank you so much, Dave. And again, I am just so humbled and honored as a resource that Biggerpockets was for me, 10, 12 years ago. To be able to now be on y'all's platform is just so crazy.

[Diandra McDonald]

Awesome. We love that full circle story. And thank you for being a member of the BiggerPockets community for so long. We really appreciate it. So thanks again, Deondra, for joining the show. And just as a reminder, if you think your story would be relevant to the BiggerPockets audience and you're a member of the BiggerPockets community, you can apply to share your story here on the show as well. Go to biggerpockets.com guest. You can fill out the whole thing there. We'll be back with another episode of the BiggerPockets podcast in just a few days, so make sure that you're subscribed on YouTube so you don't miss our next next show. Thanks for listening.

[Dave Meyer]

Your home isn't just a place to live. It's your biggest investment. You spend time, money and effort making it valuable, comfortable and safe. Maybe you've upgraded the shower head, added some new curtains and finally figured out which light switch actually controls the porch light. But the best upgrade you can make is peace of mind knowing your home is protected day and night. That's why I use Simplisafe. Unlike traditional security systems that only react after a break in, Simplisafe helps prevent them before they happen. Their active guard outdoor protection uses AI powered cameras and live monitoring agents who can actually see if someone's lurking, talk to them, activate spotlights, and they can even call the police if needed. It's proactive security that works in real time. And the best part is there's no long term contracts, there's no hidden fees, just award winning home security for about a dollar a day. And it's why over 4 million homeowners trust SimpliSafe to protect their property and keep their home secure. Right now you can actually get 50% off a new Simplisafe system with professional monitoring and your first month [e-mail] pockets that's simplisafe.com pockets. There's no safe like Simplisafe.