Using Credit Cards As Additional Capital

[Robert Shearer]

Hello BP... I hope everyone is doing well and having tremendous success in their REI ventures. It is always great to be able to use an incredible resource like BP, and have the opportunity to benefit from everything BP has to offer. As always, I know that I will be able to receive some assistance on this matter that I don't quite understand fully. In advance, I wanted to thank everyone for taking the time to respond and helping me with this matter. Its greatly appreciated. The question is as follows:

I have been told multiple amount of times , mainly by guru's, that it is always best to leverage other peoples money in order to acquire properties and get your REI business started. I understand that it would be helpful if family or friends would loan the money to you and there's always the option of private or hard money lenders, traditional loan, and other options, but the suggestion of using credit cards has created some lingering questions that I hope to get resolved with the help of this great website and all of you knowledgeable real estate professionals here on BP. I understand the concept of obtaining additional capital with the credit limits on each card you receive, and paying the minimum payment until acquiring enough profit to pay off the full balance. What I don't understand is how the credit cards are used when acquiring properties. When at closing, are you able to just swipe your credit card(s) just as if you were completing a normal transaction at the store, or is it necessary to complete either a cash advance, withdrawal, or obtain convenience checks in order to successfully acquire a property when at closing? The reason I ask is because a normal transaction is going to have your APR for purchases and there will be a period of time that you can possibly pay that back in full to prevent interest from accruing. If it's necessary to process some sort of cash advance to obtain actual cash, that process is going to create an even higher APR (usually 2% higher than the purchase rate) and the interest will begin to accrue immediately until it is paid off in full which will deplete your profit very quickly. I do know that each credit union or bank differs with their policies concerning credit cards, but from what I've heard and researched, this seems to be a common policy for almost every financial institution. Does anybody have any insight, experiences, and/or suggestions on this particular matter, and how a credit card is normally used to purchase properties or if it is even an ideal form of capital to use?

[Joe Villeneuve]

@Robert Shearer Unfortunately, this is not a cut and dry...or short answer.  The quick answer is, Yes...unless (long explanation goes here) , then NO.........but if (this is where one of those (*) like statements would go).  So I guess the real answer is ...."maybe".

I use them for investing all the time, but under very special conditions...and within a very tight, inflexible window.

The basic conditions is that they are:\
1 - Business cards
2 - Have 0% interest for at least 6 months (preferably 12)...this establishes that "inflexible window"
3 - 0% interest must apply to new purchases AND transfers
4 - Must have at least 1/2 of the available credit able to be used in a "cash advance".
5 - Must be at least 3 different (preferably 4) cards.

Process of use:
1 - Use the Cash Advance from the cards to buy property (this is a "cash like substance")
2 - Immediately transfer balance from the Cash Advance to one of the other cards thereby eliminating the high interest rate you have on cash advances.
3 - Use the remaining balances on the cards to pay for the rehab, etc...

******Here comes the most important part******

4 - Pay off all balances before the 0% interest goes "bye-bye" by:
        a - Flipping house
        b - Refinancing house
        c - Selling Equity Position in house that covers all C.C. balances
        d - ....or other exit strategy that pays off the c.c. before you get charged any interest