Using a credit card for investing

4 Replies

Has anyone used a cash advance on a credit card to finance a property? We have some high limits on a couple of credit cards with the interest rate being either 0% or 4%. My husband is military and the rates won’t change unless he gets out. We will have $10k in cash and I’m looking at financing $20-40k on the cards. It seems our rates are lower this way than any other financing options and we would have more access to cash only deals. Thoughts?

0 and 4% rates are only valid on pre-existing debt that occurred prior to joining the military unless I'm missing something massive.  I would be super cautious as new debt will likely incur the full interest rates unless you can explain what kind of system he is on.

I've used credit cards for both real estate and other businesses. I personally recommend trying to use the card for actual credit purchases: contractor payments, materials, holding costs (utilities) etc., not for cash advances. In my experience a cash advance has significantly higher interest, and even if you have no interest (or special rates) the cash advance is usually much lower than your total approved credit. For example I have 5 business credit cards that I use right now, one of the cards was approved for $20k in credit, I only get $4k in cash advance. 

Long story long, use cash for your down payment, use the credit for as much of the other stuff as you can. 

One big downside to this is it'll tank your credit till you pay down the balances. It'll also likely negatively impact your DTI so if you wanted to get a loan in future it could be harder....

So assuming you're not planning on taking out loans for these properties and can manage the temp hit to your score it'd be a ok plan.

I would be more worried about the performance of a sub 50k property...generally that's a unique asset that needs hands on management from experienced operator. Also going to need a lot of them to spread the costs/risks...and a team in place to do the work.

This is one of my favorite strategies for Creative Financing using OPM. I've bought many, many deals with CC's.

If you know yourself & can be very disciplined to pay the cards off before the low rate changes to a high rate it's a great way to use OPM & Creative Financing.

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