Is Using unsecured lines of credit right for me?

Sicklerville, NJ · Member since 2018 · 39 posts · 6 votes

Hey Everyone,

Recently we have run into the dilemma of not having the down payment needed to work with hard money on our deals. As a solution, we have spoken with a company that applies for multiple credit cards for a business (using my own credit profile to get approved) for us. The company charges 9% for their services of getting us the funds which they expect to get us approved for 50k. The credit cards would have a 0% APR in the first 12-18 months depending on each lender, after that I am anticipating average credit card rates. Has anyone ever dealt with this kind of company? Could this strategy help me scale my company and also not tie up my personal credit? Or is there some loophole I am missing with this offer? Thanks!

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Steve Vaughan

Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes

Holy 2008 bankruptcy waiting to happen. No capital. Hard money. Credit cards. 9% funding fee. I bet this is the program that also charges $3500 up front.

Save some money already. Figure out the high payments in your life like cars, clubbing and eating out and make changes. Whatever happened to good old fashioned hard work and scaling back?

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Lee Hauenstein
Port Orchard, WA · Member since 2017 · 8 posts · 6 votes
8y
Not sure I’m getting this correct. They are saying they would apply for lines of credit for your business using your personnel credit history/profile/score to get them? That sounds like the same thing you would do on your own if you apply for a business credit card? You don’t necessarily need to have a “real business” to get a business card?
What’s wrong with you applying for credit cards on your own to do this? That’s kinda what I have done to help me fund the carrying costs of a rehab (not saying this is something we should strive to do, but it is a method) note: I have not done a rehab yet, but this is my current plan and I have approximately 45k at 0%, 4%, 7%, and 9% in credit line available. Will likely be applying for another card in a week or so.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
keep in mind you max out all those credit cards your FICO is going to tank.. just do this very cautiously. and you can get these on your own no need to pay 20 points for a 50k of credit.. that's pretty high.
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Wayne Brooks
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
8y
Most of these “programs” are Not for cash advance credit cards.....they are for “trade line accounts” for businesses such as Office Depot, office max, Home Depot, etc. Not what you’re looking for.
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Steve Vaughan
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
8y
Holy 2008 bankruptcy waiting to happen. No capital. Hard money. Credit cards. 9% funding fee. I bet this is the program that also charges $3500 up front.
Save some money already. Figure out the high payments in your life like cars, clubbing and eating out and make changes. Whatever happened to good old fashioned hard work and scaling back?
7 Reply
Lee Hauenstein
Port Orchard, WA · Member since 2017 · 8 posts · 6 votes
8y
@stevevaughan May be a little judgmental here. He very well could have done that already, but doesn’t have the capital saved yet and would like to start investing in real estate now. The only bad way about doing anything is doing it without educating yourself and not understanding what you are doing. Also, knowing what level of risk you are willing to take. I am not advocating this way of doing it, but people have done it and made money on there first couple of deals this way. Yes, many more have probably lost this way. I would say that is more than likely due to not knowing what they were doing and evaluated the deal poorly, or just some big unforeseen happened. Either way, if someone wants to go this route, we should do our best to support them with education, guidance, and wisdom.
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Tariq B.
Investor · Laurel, MD · Member since 2014 · 251 posts · 140 votes
8y
No way would I stand behind that method, not without any experience. Take it slow, save up and like @Steve Vaughan said put some hard work into building your business. You will appreciate you empire much more when you realize all the small sacrifices you had to make made big impacts, trust me. Then again I'm not your typical investor who loves to use credit for everything. I like to stay more conservative in my debts. So take it for what it's worth.
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Steve Vaughan
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
8y
Originally posted by @Lee Hauenstein:

@stevevaughan May be a little judgmental here. Either way, if someone wants to go this route, we should do our best to support them with education, guidance, and wisdom.
Lee, I hear you. I was assumptive. Most that do sacrifice to save before coming on asking if triple risk leverage to get started to get started say they have already tried saving every way possible first.
If someone asks if they should get into a high risk high cost program to fund their high risk high cost credit cards as seed money so they can get a high risk hard money loan, I am going to give my wisdom and guidance and exaggerate a point. No. That is a stupid idea and will most likely end in financial carnage.
Sing kumbaya around the campfire with everybody if you wish, but I have done what I suggested. Go ahead and sing one round of kumbaya for every layer of insane risk the OP is asking about, then triple it because the problems he will face compound exponentially. And one extra round because these programs also cost $3k or so up front. Wisdom has taught me that, too.
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OP
Sicklerville, NJ · Member since 2018 · 39 posts · 6 votes
8y
Hey Steve! So just wanted to clarify a few things. The program costs nothing up front and the 9% is charged whenever they get the company approved for the line. The only cards I will be getting will have a 0% APR for 12-18 months. High level I am looking at getting this money as a loan for 1 year and paying 9% interest on it. My thinking is that thats a better interest rate then I will be getting on the hard money loan. We do have cash, but this creative financing opportunity seems interesting. We are project and property managers in the area we invest in and have completed rehabs, flips, and BRRR's for our clients. Our average deal takes about 6 months to be stabilized 1 way or another. Hope this provides some more background!
Originally posted by @Steve Vaughan:

Originally posted by @Lee Hauenstein:
@stevevaughan May be a little judgmental here. Either way, if someone wants to go this route, we should do our best to support them with education, guidance, and wisdom.
Lee, I hear you. I was assumptive. Most that do sacrifice to save before coming on asking if triple risk leverage to get started to get started say they have already tried saving every way possible first.
If someone asks if they should get into a high risk high cost program to fund their high risk high cost credit cards as seed money so they can get a high risk hard money loan, I am going to give my wisdom and guidance and exaggerate a point. No. That is a stupid idea and will most likely end in financial carnage.
Sing kumbaya around the campfire with everybody if you wish, but I have done what I suggested. Go ahead and sing one round of kumbaya for every layer of insane risk the OP is asking about, then triple it because the problems he will face compound exponentially. And one extra round because these programs also cost $3k or so up front. Wisdom has taught me that, too.
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OP
Sicklerville, NJ · Member since 2018 · 39 posts · 6 votes
8y
Hey Tariq, I responded to Steve with some background! Would love to hear an updated take from you!
Originally posted by @Tariq B.:

No way would I stand behind that method, not without any experience. Take it slow, save up and like @Steve Vaughan said put some hard work into building your business. You will appreciate you empire much more when you realize all the small sacrifices you had to make made big impacts, trust me. Then again I'm not your typical investor who loves to use credit for everything. I like to stay more conservative in my debts. So take it for what it's worth.
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OP
Sicklerville, NJ · Member since 2018 · 39 posts · 6 votes
8y
Hey Wayne, this program is not for vendor cards but for cash advance and balance transfer cards with 0% APR for the first 12-18 months.
Originally posted by @Wayne Brooks:

Most of these “programs” are Not for cash advance credit cards.....they are for “trade line accounts” for businesses such as Office Depot, office max, Home Depot, etc. Not what you’re looking for.
0 Reply
Account Closed
OP
Sicklerville, NJ · Member since 2018 · 39 posts · 6 votes
8y
Hey Lee, Thanks for the response! I guess you are right, I could apply for these cards for my business on my own. I guess the company really sold me on the fact that they make sure the usage of these cards are not connected to my score personally, and also that they know what lenders to go to to get 0% APR for 12-18 months and they know which lenders my financial profile would get approved for. Do you have any suggestions of some lenders to check out?
Originally posted by @Lee Hauenstein:

Not sure I’m getting this correct. They are saying they would apply for lines of credit for your business using your personnel credit history/profile/score to get them? That sounds like the same thing you would do on your own if you apply for a business credit card? You don’t necessarily need to have a “real business” to get a business card?
What’s wrong with you applying for credit cards on your own to do this? That’s kinda what I have done to help me fund the carrying costs of a rehab (not saying this is something we should strive to do, but it is a method) note: I have not done a rehab yet, but this is my current plan and I have approximately 45k at 0%, 4%, 7%, and 9% in credit line available. Will likely be applying for another card in a week or so.
0 Reply
Account Closed
OP
Sicklerville, NJ · Member since 2018 · 39 posts · 6 votes
8y
Hey Jay, so they are assuring me that usage of these cards will not be tied to my personal score. For background, I am 25 with a 710 credit score but I don't have any cards with those type of limits. Do you have any business credit lenders you could suggest?
Originally posted by @Jay Hinrichs:

keep in mind you max out all those credit cards your FICO is going to tank.. just do this very cautiously. and you can get these on your own no need to pay 20 points for a 50k of credit.. that's pretty high.
0 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
Originally posted by @Account Closed:

Hey Jay, so they are assuring me that usage of these cards will not be tied to my personal score. For background, I am 25 with a 710 credit score but I don't have any cards with those type of limits. Do you have any business credit lenders you could suggest?
Originally posted by @Jay Hinrichs:
keep in mind you max out all those credit cards your FICO is going to tank.. just do this very cautiously. and you can get these on your own no need to pay 20 points for a 50k of credit.. that's pretty high.
well if you trust them ... I have LOC's personally but those are local commercial banks with deep roots in the community and a very long term relationship with.. national lenders you never know you can make an app and the computer spits out an approval.
if you go down the CC route just be careful.. and make sure you pay them off once you get into credit card debt its tough to get out.
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Brett Leavitt
Real Estate Coach · San Diego, CA · Member since 2014 · 12 posts · 3 votes
8y
I just received over 100K in unsecured credit cards, stated income that are 0% for 24 months I used for 2 rehabs and appliances as well as I used 1 to lend out to a guy in our group for GAP funding at 25%. Also alot of people dont know but you can request at the end of the 24 months to keep the interest at 0% if you know what to say. Feel free to private message me if you want and Ill share my experience and cards.
0 Reply
Calvin Lipscomb
Brooklyn, NY · Member since 2016 · 316 posts · 130 votes
8y
Originally posted by @Account Closed:

Hey Everyone,
Recently we have run into the dilemma of not having the down payment needed to work with hard money on our deals. As a solution, we have spoken with a company that applies for multiple credit cards for a business (using my own credit profile to get approved) for us. The company charges 9% for their services of getting us the funds which they expect to get us approved for 50k. The credit cards would have a 0% APR in the first 12-18 months depending on each lender, after that I am anticipating average credit card rates. Has anyone ever dealt with this kind of company? Could this strategy help me scale my company and also not tie up my personal credit? Or is there some loophole I am missing with this offer? Thanks!
If your credit is that good then do it yourself. Just look at the cards offering 0% interest and apply for 7 on the same day. Then hard credit inquiry may not show all of the inquiries for the same day.
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