Contractor · Atlanta, GA · Member since 2008 · 978 posts · 985 votes
6y
I am currently in Japan. I flew here with my wife, business class. We are going to stay at some top notch absurd hotels and then fly back home, business class. We do this... well, we do it 3-4 times a year to various international locations (This year we spent part of May in France, Thanksgiving in Italy, etc.)
The transit for these trips cost me less than it would for me to drive from Atlanta to any beach.
We are doing this with credit card points made off the business credit card account. We pay everything we possibly can with that account, and rack up huge points doing so. (For example, our lumber yard takes credit card with no additional fees.)
Needless to say, I am a huge fan of using credit cards for this reason.
However, if you are going to use the credit card in lieu of being able to actually pay for renovation costs, it can be a terrible plan. Credit cards are high interest propositions and can easily cost you a fortune if you don`t use them responsibly.
Research carefully before getting a card, as some have better benefits than others and some will have benefits that are better for YOU than others. There are plenty of websites that are like biggerpockets, but for credit card reward programs. We researched heavily before getting a card and re-evaluate about once a year to make sure we are still getting the best we can out of it.
Contractor · Atlanta, GA · Member since 2008 · 978 posts · 985 votes
6y
I am currently in Japan. I flew here with my wife, business class. We are going to stay at some top notch absurd hotels and then fly back home, business class. We do this... well, we do it 3-4 times a year to various international locations (This year we spent part of May in France, Thanksgiving in Italy, etc.)
The transit for these trips cost me less than it would for me to drive from Atlanta to any beach.
We are doing this with credit card points made off the business credit card account. We pay everything we possibly can with that account, and rack up huge points doing so. (For example, our lumber yard takes credit card with no additional fees.)
Needless to say, I am a huge fan of using credit cards for this reason.
However, if you are going to use the credit card in lieu of being able to actually pay for renovation costs, it can be a terrible plan. Credit cards are high interest propositions and can easily cost you a fortune if you don`t use them responsibly.
Research carefully before getting a card, as some have better benefits than others and some will have benefits that are better for YOU than others. There are plenty of websites that are like biggerpockets, but for credit card reward programs. We researched heavily before getting a card and re-evaluate about once a year to make sure we are still getting the best we can out of it.
Investor · Atlanta, GA · Member since 2014 · 389 posts · 250 votes
6y
@Isaac West - Nobody can give a truly useful answer with the limited information you've given. You purchased the property for $8,000?? Where is it? How much do you plan to spend on rehab? What's the ARV? Are you flipping or holding? What kind of biz card, what are its terms?
I would NEVER use a credit card UNLESS I’m either able to pay the full balance on the first statement, or get an extremely low interest rate deal (like 0% or .99% for 12-14 months). Credit card interest rates can be double or triple hard money rates! The interest you pay is far far more than the value of any travel rewards you'll get.
If you don't have a fantastic credit card deal and you can get a HELOC (on your personal residence) at 5%-6%, use that for your rehab. Keep good records so you can write off the interest as a business expense (still allowed under new tax rules).
Be aware that you probably can’t get a real “cash-out” refi (based on ARV instead of purchase price) for at least 6 months after purchase. You should also verify for 100% sure that you can get a mortgage at all on a property with that low a value. Most traditional lenders can’t do loans under around $45K because the basic closing costs are too high a percentage of the overall value, and there are laws against that. ARV would have to be around $60,000 to get a $45,000 mortgage (at 75% of ARV).
If you have outstanding credit, are very good with planning and keeping track of due dates, and are inundated with 0% promotional offers, those kind of credit card deals can be a very useful tool in your RE arsenal. I used one last year when scrambling for a final $10,000 for a cash purchase after another funding source fell short. Google Calendar is my total BFF for due-date and promotional expiration date reminders.
Flipper/Rehabber · Tallahassee, FL · Member since 2019 · 20 posts · 4 votes
6y
@Anna Watkins thank you for that.
As far as the rehab it is only 35k and it is expected to appraise for 110 after rehab is completed.
I plan on getting a zero interest credit card for 12 months thus when I refinance the property it will cover the rehab cost plus give me leverage on the next property. I usually don’t want to spend no more that 50k total on properties and at least have a 20% buffer in equity.
Developer · Maplewood, NJ · Member since 2019 · 56 posts · 30 votes
6y
I do the same. What credit cards do you like the best? Currently using Marriott business card to stay in nice hotels for free throughout the year. I don't think I am getting max value for my spend so I am switching to the Spark Visa business card and will use that for 2020 because of the 200,000 miles sign up bonus. I would rather have free flights than hotel rooms.
Flipper/Rehabber · Tallahassee, FL · Member since 2019 · 20 posts · 4 votes
6y
@Scott Friedmann I’m with you 100 percent I try to switch cards with zero interest each year if I can (well that’s the plan for 2020) I’m a flight guy myself as well
We use our Chase Business Preferred for most of what we do. Our points earned over the year more than paid for our flight and lodging for two weeks in Buenos Aires in September. Also, it gives you an extra year of warranty (on top of the manufacturer warranty) on anything you buy with the card. It's not the right card if you plan on carrying a balance, but we pay ours off monthly.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
6y
Any leverage you can use responsibly (note "responsibly") and at a rate at or lower than your other options, it is a good idea. Getting credit card bonus stuff like airline miles, cash back, etc is gravy.
Last year I accumulated over $400k in credit card transactions and the bonus stuff is nice to get back.