Investor · Philadelphia, PA · Member since 2014 · 351 posts · 80 votes
Has anyone ever paid for a property with a credit card? Would a credit card even be an acceptable method of payment at closing?
I'd really like to hear some stories (If you have one), when you (or someone you know) has ever purchased Real Estate with a credit card. It could be an $8,000 sheriff sale shell, or down payment on a larger scale property
Just did a deal with a credit card. As it was a quick close and financing took longer than expected. Once my LOC was approved with my credit union I paid off my credit card within 3 weeks. Not sure if this was a good process as I am a newbie but it worked for me and allowed me to get a Great deal, I would have missed out on.
@Account Closed Thanks for the quick response. I wasn't sure if it was even possible which is why I asked. I never even considered the charge-back aspect
@Brent Coombs so I guess my best option is the cash advance feature on the credit card. That would be a good option (and negotiation tool) if a motivated seller needs a quick closing.
I'd never use a CC for a purchase. Cash advances from CC are expensive, and if that is your only option, you aren't ready to buy. Save up some cash and buy when you are ready. If you need a cash advance from a CC to make a deal work, you'll be dead in the water before you even start.
That said, unless you are doing private money or OWC, no bank is going to loan you money if you are using a CC cash advance for a down payment. Honestly, I doubt a private lender would lend you money if you have to use a cash advance to make a deal work either, it's very dangerous.
If this is your only route of funds, Hopefully you have a credit card with a current 0% interest rate up to a certain time period and the use of convenience checks, this will give you a better overall cost benefit since there's no interest while you work out your property strategy.
Example: I have a credit card with a $10,000 credit limit and 0% interest until May 2017 I could write a convenience check for the $8,000 property.
I'm a more conservative investor so I wouldn't go this route using a credit card, but good luck with the deal.
Starting with a credit card is one of those snake oil sales pitches. It's like playing Russian Roulette, 5 time out of 6 it may work the problem is there is no way of knowing if the live round is in the first chamber or the last.
If you want to truly improve your odds of success starting out work hard, save every penny and when you have actually have real money invest it.
If a investor does not have the discipline to work hard and save their own money to invest it is unlikely they have what it takes to succeed. 9 out of 10 will fail miserably but you seldom hear from them on investor forums like this one.
If you don't have any money and close with a credit card, what are you going to do after you close? Water heater goes out ... put a new one on the credit card? Tenants miss rent ... pay the mortgage on the credit card? Even if you can do this, just because you can do something doesn't mean that you should.
@Brent Coombs so I guess my best option is the cash advance feature on the credit card. That would be a good option (and negotiation tool) if a motivated seller needs a quick closing.
Yep. Why not? Having a useful Credit Card withdrawal limit is as good as having your Hard Money Lender in your pocket - but of course I do agree that Credit Cards should only be used (sparingly) by people who don't normally need them! If you're already living hand to mouth just paying off accruing Credit Card interest - you need to be ripping those Credit Cards up!
But, paying 20% interest on a deal that gets you 30%+ return is very do-able! Cheers...
Just did a deal with a credit card. As it was a quick close and financing took longer than expected. Once my LOC was approved with my credit union I paid off my credit card within 3 weeks. Not sure if this was a good process as I am a newbie but it worked for me and allowed me to get a Great deal, I would have missed out on.
that was the most useless respond I've ever seen. Almost all responses from this individual are useless.
What was wrong with @John Anderson's response? Cash (advance) works, doesn't it?...
The response does not really address anything that relates to the original question posted. A credit card charge is only a method of payment, back charges can be avoided by a credit card authorization form, with form of ID, etc. If you have a 10k credit limit, typically your CA limit will be significantly lower, whereas if you can find a company that will accept credit cards, you can use the whole limit.
I have used cash advances of credit cards for purchases of 3 properties. The 0% balance transfer is usually 12 to 18 months offered. I do a fast monthly payoff in order to avoid the higher rates that the cc charges when it returns to the the regular rates. I used various strategies to buy properties and the 0% credit cards balance transfer is one of them. The cc balance transfer is for the full limit of the card's credit line minus the transfer fees.
that was the most useless respond I've ever seen. Almost all responses from this individual are useless.
What was wrong with @John Anderson's response? Cash (advance) works, doesn't it?...
The response does not really address anything that relates to the original question posted. A credit card charge is only a method of payment, back charges can be avoided by a credit card authorization form, with form of ID, etc. If you have a 10k credit limit, typically your CA limit will be significantly lower, whereas if you can find a company that will accept credit cards, you can use the whole limit.
In that case, @John Anderson might also be implying similar to what I wrote elsewhere ie. Good luck finding Sellers or Agents who offer CLEAR TITLE by credit card purchase - with no additional rights of title retention or foreclosing conditions! Cheers..
Can you pay yourself with a CC via PayPal to avoid the CA fee? Not sure if that is legal but seems like it could allow you to borrow from your CC using an introductory rate.
that was the most useless respond I've ever seen. Almost all responses from this individual are useless.
What was wrong with @John Anderson's response? Cash (advance) works, doesn't it?...
The response does not really address anything that relates to the original question posted. A credit card charge is only a method of payment, back charges can be avoided by a credit card authorization form, with form of ID, etc. If you have a 10k credit limit, typically your CA limit will be significantly lower, whereas if you can find a company that will accept credit cards, you can use the whole limit.
In that case, @John Anderson might also be implying similar to what I wrote elsewhere ie. Good luck finding Sellers or Agents who offer CLEAR TITLE by credit card purchase - with no additional rights of title retention or foreclosing conditions! Cheers..
There are several ways to do it, in my part, I just have the convenience of having 3 companies that I own which I could switch funds around. I can take card payments from ABC and proceeds get deposited to XYZ, then pay it back to ABC (or cash back to ABC). Of course, ABC is a corporation and XYZ is a corporation. On a lower scale, ABC can be the individual, and XYZ could be a sole prop/llc/corp (a business entity) that accepts credit cards. There's also other ways but you should get the point by now.
that was the most useless respond I've ever seen. Almost all responses from this individual are useless.
What was wrong with @John Anderson's response? Cash (advance) works, doesn't it?...
The response does not really address anything that relates to the original question posted. A credit card charge is only a method of payment, back charges can be avoided by a credit card authorization form, with form of ID, etc. If you have a 10k credit limit, typically your CA limit will be significantly lower, whereas if you can find a company that will accept credit cards, you can use the whole limit.
In that case, @John Anderson might also be implying similar to what I wrote elsewhere ie. Good luck finding Sellers or Agents who offer CLEAR TITLE by credit card purchase - with no additional rights of title retention or foreclosing conditions! Cheers..
There are several ways to do it, in my part, I just have the convenience of having 3 companies that I own which I could switch funds around. I can take card payments from ABC and proceeds get deposited to XYZ, then pay it back to ABC (or cash back to ABC). Of course, ABC is a corporation and XYZ is a corporation. On a lower scale, ABC can be the individual, and XYZ could be a sole prop/llc/corp (a business entity) that accepts credit cards. There's also other ways but you should get the point by now.
I'm fairly sure that the OP won't be helped by that post either...
I'd never use a CC for a purchase. Cash advances from CC are expensive, and if that is your only option, you aren't ready to buy. Save up some cash and buy when you are ready. If you need a cash advance from a CC to make a deal work, you'll be dead in the water before you even start.
That said, unless you are doing private money or OWC, no bank is going to loan you money if you are using a CC cash advance for a down payment. Honestly, I doubt a private lender would lend you money if you have to use a cash advance to make a deal work either, it's very dangerous.
Thats not necessarily true with cash advances because compared to private or hard money it may be a lot less expensive than you might have imagined. Most people are used to cash advances from typical big banks like Chase, B of A, Citi, Wells, and such but credit cards with credit unions like Penfed.org, navyfederal.org, DCU.org, BECU.org, western.org, obee.com, and other CU's have rates in the 6.75% - 9.99% range which is often times cheaper than most hard money or private lenders and most of these CU's also dont have the typical 3% fee/points charged upfront for the money either.
The big banks charge 18-24% usually on cash advance and they limit it to 20-25% of the total credit line so a 25k limit only provides around 5k of cash advance max while CU cards typically offer the full credit limit for your cash advance if needed.
The only downside is if you max out a revolving line you'll typically drop around 80-100 FICO points till you pay it down to 0-30% of each cards respective limit.
No bank will lend money when using credit card funds as equity, this depends, if you take it out during the conventional loan transaction and the underwriter knows its cash advance then you're right however, if you take it out and have the funds season for two full months on your bank statements then its no longer considered unsecured funds (credit/revolving) then you can use it for your down payment. It all depends on how the mortgage is planned or structured.
I appreciate your input @Ray Johnson. It's all about strategy and options for me. This makes sense, I could easily pay $8,000 for a Sheriff sale property, and have the cash paid pack before my introductory period expires.
Hey Ryan-
Yep. Last year I purchased a 7 unit rehab project using credit cards. 0% interest for 18 months. I pulled 35k off of them in the form of cash advance and the check service a couple of them provide. (USAA and Barclays both have checks that come with some of their cards.
I'm about to refinance that property now, with 140,000 more equity than I purchased it for. Responding to one of the other posters- sure, I could have tried saving for 5 years, before buying anything, but where's the fun in that? I want 500 units in 5 years, not to be buying my first one.
@Thomas S. I agree, but one of the things I tell most people when looking at credit of any financing is "know yourself". I know I am responsible with my finances, and debt obligation. I am simply exploring all options when trying to creatively finance a deal.
@David Faulkner I never said I didn't have the money (Which I do). My only reasoning for this post is to find out if it is possible to purchase property with a CC