Is anyone having success using the 0% balance transfers credit cards for short term expense spending? I have often thought about how to take advantage of these.. Specifically for cash out refinances or flips.
I used this successfully on my first BRRRR and find it to be some of the cheapest financing available. I talk about this a little bit in my podcast (link in my signature below).
For me, I was able to pull cash advances to the tune of about $35,000 and/or put a charge on a 0 interest credit card such as Home Depot, Lowes and Synchrony.
I caution those of you who are not very organized or may have cash flow issues against this method as being late on 1 payment on a card can negate the entire program and throw you up into a 20%+ interest rate until it is paid off. Read the terms.
During the remodel phase, I paid only the minimums on the cards to keep things flowing. My mortgage company had a 6 month seasoning for the refi, so during that time I finished the rehab, put tenants in and made the minimum payments. Then at refi, I did some pretty in-depth cash flow analysis and opted to use the refi money to buy another house instead of pay off the credit cards. The reason is that I had enough cash flow from the rent to just pay off the credit cards with cash flow instead. For most people, however, they will want to pay off the credit cards with the refi money.
Kinda sucked for my credit score to have so much credit utilized (I was hovering around 65% at the high point), but once I got it all paid off, my score jumped about 40 points from where it had been. I then called all the credit card companies and asked for a limit increase, which they all granted. I now have about $90,000 worth of credit I could do this on again.
The keys to success on this method are organization, cash flow and having a Plan B in case your remodel doesn't finish in time or the house doesn't appraise for what you think it will. Those last two items will kill everything and effectively bury you under high interest rates and crushing payments.
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