Is it smart to use a business credit card

5 Replies

It all depends. Is it smart? I would say it is best to find other options first. There are 100% hard money loans that will cover everything but holding costs and closing costs. They will normally want to see some cash on hand but you can use the the CC to then pay your GC the down payment which will be reimbursed by draws. It keeps your out of pocket down. I wouldn't fund all $50k+ of a project on CCs because that will catch up with you quickly.

@Michael Spindler I bought a Multi at a great deal. Renovated about 50k on personal credit cards. Have over 350k in equity. And would u believe it the debt that created the equity is what's making my refinance so difficult.

My next property I will not be using credit cards.

Cash back and points are great, but I saved more using Ebates.

@Ryan Blake

Ryan, I definitely would agree and not use the credit card to fund the whole deal. In the case that the HML wouldn't cover the down payment, I would use the credit card. Also, use it for the closing costs and any other things that may pop up.

@Michael Spindler Much smarter move. An HML will want to see that you have about $15k+ in the bank because they won't like hearing that you are just going to put it on credit card. I wouldn't tell them that. And you don't want to put your down payment or closing costs on credit because that would mean you would have to do a cash advance on the cards which is extremely expensive. I don't know of any card that will let you do that without serious fees and interest even with introductory rates. I would use it to pay your GC before you get draws and any holding costs like utilities.

I think you would need to asses the cost of the business funding vs what you are trying to accomplish. 

If you have $0 then business credit card stacking may be the only way but if you have 10k saved up then you may be able to get with a lender that does 100% fix n flip loans and get into a property with no money down just closing costs and reserves for interest only payments during the rehab.

I would say talk to a few lenders that offer both types of funding and go from there.

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