3 Ways to Use Credit Cards in Real Estate Deals
Categories: Blog Posts
How can credit cards help real estate investments? Here are 3 ways to use 0% cards.
Business credit cards with 0% rates can be a great entry point for new investors. Unsecured credit can fill the gaps left by your primary loan.
But how is a credit card supposed to help on a real estate investment? Let’s go through 3 ways you can use it.
1. Reserves or Down Payment on Credit Cards for Real Estate
If you have unsecured lines, or even 0% credit cards, and move the money over to accounts, then you could use those funds as reserves or a down payment.
The more money you can put in as a down payment, the better your rate, terms, and cash flow will be. Maybe funds from a credit card could allow you to put 10% rather than 5% down. This change could lower your interest rate by 1-2%.
Lenders give better rates to lower loan-to-value deals – especially for bridge loans. Take advantage of this by using unsecured credit to get more money.
2. Saving Money on Interest
Typical interest rates on credit cards are around 19-29%.
Say you put $25,000 on a 24% credit card for an investment project. Over the course of a year, that’s about $6,000 in interest. Multiply that by however many projects you complete in a year, and the costs add up fast.
0% business credit cards just make sense. With these, you can pay $0 in interest for your first year or two, rather than an astronomically high 29%.
3. Protecting Your Credit Score
When you use credit cards on your personal account, the usage negatively affects your credit score. You can’t get great loans from banks and private lenders with a bad credit score.
These 0% credit cards and other unsecured lines should be put under your business name, not your personal name. When you use an LLC, this credit usage comes off your personal credit report.
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