0% Interest Credit Card to Finance a Flip?

10 Replies

Hello, I have the ability to utilize several credit cards that offer 0% interest for up to 21 months to purchase a SFU to rehab and flip.  Good idea?...versus borrowing against my 401k, hard money or savings?

For the actual purchase you most likely will not be able to use a credit card. As far as for all of the stuff at Lowes/rehab sure it's a great idea.

@Dymond Shafer

This was a method I used when I first started out years ago (I invest in buy and holds out of state).  This is a method I thoroughly am thankful I did HOWEVER there is a discipline to doing this correctly and cautiously.  Make sure you map out a good game plan first so that this way you are not stuck paying the debt out of pocket for too long.

In regards to leveraging your 401k, I would only consider that once you have bought several investment properties first this way your experience will help guide the type of purchase yuo make with the borrowed 401k funds.

Hope this helps!

Thank you for the advise!

I should've clarified.  I can do an 0% ACH balance transfer from my available credit card balances to my checking/savings account.  Wouldn't this, in essence, avoid the dreaded holding costs?

Originally posted by @Dymond Shafer :

Thank you for the advise!

I should've clarified.  I can do an 0% ACH balance transfer from my available credit card balances to my checking/savings account.  Wouldn't this, in essence, avoid the dreaded holding costs?

 Is this your first flip? I would proceed very carefully. If things go south, it won't be long until you are staring at a 36% interest rate.

Also, be cognizant of the effect this will have on your credit score for your subsequent projects.

I see...thank you all for the insight.  I'm just trying to narrow down the best financing option for my first flip.  0% cc, private lenders, 401k, savings.  I have great credit and a bit of savings.

I used credit card to finance the reapirs 35k total. I recently refinanced the home once it went up in value and paid off the credit cards.  It's risky but yes you can, just make sure the numbers work. 

You better have a great income too because this will tank your DTI along w/ your credit score. Doesn't matter a whole lot once you pay it off, but if you need to refi for whatever reason.....

@Dymond Shafer ,

It's 0% interest, but most have a 3-5% origination fees upfront, so just make sure you read the fine print.    If you're doing a flip, it's possible, however as others have stated, your credit will quickly tank, just be ready for the swing.  If you have a set exit strategy, other than it being expensive, I don't see any issues with the strategy.    

We utilize CCs a lot with our strategy, but since it can be like playing with fire,  you absolutely need an exit strategy and a plan. 

@patrick mueller there’s a website, nerd wallet, that searches for such cards

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