All Forum Posts by: Michael Semcken

Hello BP community!

I just purchased a duplex and need to replace the flooring in one of the units. Im obviously searching for the most affordable option to do so. Im open to carpet or laminate. It’s roughly 480 sq. ft of space.

From the experience of those who’ve gone through this before, what would you recommend? I’m not sure how difficult it would take to manually replace flooring, so I’m seeking the advice of others. Should I do the work myself? Or look at hiring someone to come and complete it?

Thank you for the help!

Hey Michael, 

Have you looked into refinancing and then paying off all your debts? Then possibly doing another HELOC or using extra funds from the refi to make your next purchase or even using the rental income to save for the next purchase?

There's many routes to take, and may take some math to figure out which one is best and saves the most money. 

@Michael Semcken the biggest thing here is that we need you to get prequalified for your refinance step.  That's pretty important to what you are asking.  It sounds like you already have acquired the credit card debt?  If so, then your credit would have taken the necessary hit.  But if you haven't put debt on your credit card I would HIGHLY suggest an alternative.  But if you have already done it, then there's no going back.  But get prequalified.  That will answer the question of "how much money can I get out of my home".  Hope that makes sense how I am describing it.

@Sam Zawatsky The 1% rule was created around 2010-2013 when homes were half of what they are now and interest rates were 3%, it's not a good metric. Cash flow is a much better metric to use because it takes cost of debt and expenses into account. If you want to increase your rental income then put a house on Airbnb, VRBO, or FurnishedFinder as a STR or MTR. I increased by rents from $2,450/month to $5,600/month by just furnishing my rentals. It takes a little work but totally worth it.

Worried was credit counseling which crashes your FICO. Chase did a few inquiries on the score pulling it down about 4-5 points for each hit. Do not apply around to decrease score. Do not close accounts.

4.75 is not a rate I would lose sleep over changing it to market rates. Is your HELOC variable? Max is 18% ?

Who is HELOC? maybe try at Synchrony or Huntington when you are ready and get a fixed larger HELOC and then look at blending whatever that rate is with your 4.75. No one can tell you what rates will be in the future.

Keep ticking away at the credit cards to get your score up. Get the balances below 68% of the lines.

Credit cards on payment plans what do you mean by that phrase?

@Justin Melton what you do with that money depends on what your goals are? If you want to earn income today (short-term) then invest in something that will generate a good income today. For example, there are excellent private equity opportunities where you can earn returns of 25% or more. These are more common than you think if you know where to look. And these companies have been doing it for 10 years so they have a good track record. So in this example, you double your money in 4 years. 

Or you could look at starting your own syndication and leverage your money into getting into much bigger investments like apartment buildings. Go out and raise money from partners. In addition to making returns on your investments, you can also make money raising money, managing the syndication and finding properties. To me, this is much better and more fun than managing single-family homes or smaller MFUs. 

@Lynn Fletcher

In our experience, the #1 mistake owners make when selecting a Property Management Company (PMC) is ASSUMING instead of CONFIRMING.

It's often a case of not doing enough research, as they don't know what they don't know!

Owners mistakenly ASSUME all PMCs offer the exact SAME SERVICES and PERFORM those services EXACTLY THE SAME WAY, so price is the only differentiator.

So, the first question they usually ask a PMC is about fees - instead of asking about services and HOW those services are executed.

EXAMPLE: PMC states they will handle tenant screening – what does that specifically mean? What documents do they require, what credit scores do they allow, how do they verify previous rental history, etc.? You’d be shocked by how little actual screening many PMC’s do!

This also leads owners to ASSUME simpler is better when it comes to management contracts.

The reality is the opposite - if it's not in writing then the PMC doesn't have to provide the service or can charge extra for it!

We have a 14-page management contract that we've added our real experiences to over the years, with the intent of protecting both us AND the landlord. Beyond the Monthly Management, Placement & Maintenance fees, all other fees in our contract are IF EVENT -> THEN fees.

We don’t know any PMCs to recommend in the area mentioned, but since selecting the wrong PMC is usually more harmful than selecting a bad tenant, you might want to read our series about “How to Screen a PMC Better than a Tenant”:

https://www.biggerpockets.com/member-blogs/3094/91877-how-to-screen-a-pmc-better-than-a-tenant-part-1-services-and-processes

We recommend you get management contracts from several PMCs and compare the services they cover and, more importantly, what they each DO NOT cover.

EDUCATE YOURSELF - yes, it will take time, but will lead to a selection that better meets your expectations & avoids potentially costly surprises!

P.S. If you just hire the cheapest or first PMC you speak with and it turns into a bad experience, please don’t assume ALL PMC’s are bad and start trashing PMC’s in general. Take ownership of your mistake and learn to do the proper due diligence recommended above😊