First, there are mortgage companies that will give you 90% loans on investment property, go to greenpoint.com. I used a credit card to make my first 10% down payment but then I refinanced after I improved the value of the property and appreciation kicked in. I refinanced one year later with same mortgage company at 80%LTV, paid off credit card, and even walked away with a small amount of cash at closing to reimburse me for my improvements. I am now cash flowing $300 a month on the property, up from the $200 after I bought the property. Pick properties carefully and know that you can increase the value to refi later.
Maybe I am wrong, but say that I need 15K on a 100K purchase price for a property because the bank will only give me 75K on an investment property, and all I have is 10K. But don’t credit card co.'s usually charge 3% for a minimum monthly payment on the balance so 3% on 15K is 450/mo. This would cause a lot of negative cash flow situations right? Because if I could fing a bank that would give me a 90K 1rst, my overall payment would be less, than the 1rst senario with the cc payment.
75K at 7%=500+450 (cc payment)=950/month. VS.
90K at 8.5%=600/month
So you can see that the extra 350/month could kill my cash flow.
What are some good ways around this?
James B