Posted by Paul NM on November 28, 2000 at 10:57:16:
Hi Ryan,
I suspect that sometime in the future a historian is going to look back and write a book describing charge cards as the largest source of new business venture capital of the 1990’s. It’s available to anyone, experienced or not and has no rules on how it is used.
IT’S ALSO REALLY DANGEROUS and the reality is very few businesses have profit margins that can afford the rates. It tempts you to substitute cash for creativity.
Paul
Credit cards to finance properties (initially)? - Posted by Ryan - NE
Posted by Ryan - NE on November 28, 2000 at 09:49:17:
Has anyone used credit cards, to help out initially, to finance properties for long term investments? If so, how did it work and how did you later refinance? If anyone has had bad experiences or would not recommend this please let me know, I am just trying to find out more on this topic.
Thanks,
Ryan - NE
Depends on the deal - Posted by IB (NJ)
Posted by IB (NJ) on November 28, 2000 at 16:09:06:
I’d say it depends on the deal. I just took out a $10k cash advance (can someone say OUCH!) to buy a sfh for $17k. The house needs work and is worth as is $50k. After putting about $25k in to fix up, I should get about $110-130k for it (after getting in for $42K). The seller needed cash fast and wanted to close in 5 days (made it). I would not have been able to do this without hitting the credit card. Should be closng in a few days on another property I’m selling. With the proceeds from that I’ll be paying off the credit card. But I would only tap the card for cash when I really have a good once-in-a-lifetime deal cooking and I was short on cash…
Pros and Cons - Posted by SusanL.–FL
Posted by SusanL.–FL on November 28, 2000 at 11:09:54:
When I was in my financial$ heyday (back in the mid-80’s), I borrowed against credit cards to do deals. It was quick and easy. Had three credit cards, each with $20K credit lines. I was my own bank and it was great!
The ‘down side’ of using credit cards is…suddenly NOT being able to pay them off (for whatever reason).
We NEVER know what kind of ‘hand’ life is about to ‘deal’ us…no matter HOW much we plan or how ‘in control’ we think we are of a situation.
As a matter of fact, I’m still digging out from under the ‘down side’ right now. (The ‘down side’ being: $470,000 in assorted debt!)
The same advice also holds true for borrowing the $equity out of a property. Unless you are darn sure you can make those payments each month on your equity credit line, proceeeeeeed with caution!
P.S. With a LOT of hard work (and perseverence), I am nearly back on my $feet again—and about ready to rock 'n roll! 