0% credit card to float bank draws

6 Replies

I'm getting ready to partner with an experienced investor/flipper on my first flip. He has recommended getting a 0% interest credit card to float material/labor costs while waiting on the bank draws once each stage of the rehab is completed, thus avoiding having to come out of pocket with large chunks of cash. We're estimating anywhere from 3-6k at a time.

I'm sure some of you have done this. Any thoughts on this strategy? 

How much is the total rehab? Estimated length of project? I guess this is fine since you will also be getting the points. Just make sure you have your own capital available in case things go sideways so that you can pay that card off before the 0% expires. Please don't over leverage yourself with what appears to be a short cut.

@Clint G. - I'm a supporter of the strategy, mainly because I went all in on it and made it out the other end alive.  It was a super stressful time period and risky as well, but I was able to jump start my business with very little of my own money.  

I'd say the most important key to the continual success of this strategy is to be able to qualify for a bank loan. Meaning, if something happens and you cant sell the property, you can immediately walk down to the bank and get a mortgage on it.

@Clint G. I am a huge fan of using 0% credit cards, as long as you can pay it off before the 0% promotion expires. I have another business that I got off the ground last year and used a 0% credit card which has been as awesome way to start scaling my business! I totally plan to do this for future rehabs as well. 

@Jon Schoeller

The most I'd have to float on the card would be no more than 7k estimated. I'd get that back shortly after the banks inspector verifies the work is completed.

I do not intend to carry a balance any longer than needed, and I'll pay the card off as each bank draw comes in... in a perfect world.

Done it successfully to make $40k on my first flip. Highly recommend & points are nice. Couldn’t have done this project without it & fully utilized my 800 credit score too!