Turning Junk Mail into OPM

[Daniel Sprague]

Hey BP,

Just wanted to share how i changed junk mail into a financing option for projects.

I started using interest free credit cards back when i was 23 when i didn't have enough money to finance needed upgrades.  To be specific, my first rental was bought with original wood siding (terrible condition), and I had no money left after my down payment.

I saw new siding as the biggest hinderance to higher rents, so i took that piece of junk mail advertising 18 months interest free financing that i had been throwing away since i turned 18, and applied for the card. The job was $13,000, the contractor accepted credit cards point of sale, so there were no fees (trully no interest), and i paid it off over 15 months with cash flow from the property (the property cash flows about $1,000/month after PITI).

This is pretty elementary, but i think the biggest positive to this stategy is it gets needed renovations done now.  If left to saving $13,000, cash flow would have been spent elsewhere, and i would be paying a monthly "hidden interest" based on the type of tenants, and lower rents recieved b/c of worse curb appeal.  It is very possible that the home would still be covered by rotten wood siding.

Now that i am more seasoned i dont necassarily have a need to continue to finance projects in this manner, but i still do.  I see it as a great form of OPM as it is unsecured, and you can pay $50 or $500 based on if you had a good or bad month as long as you pay the entire balance off by the end of your interst free period.

Obviously i am leaving out the risks involved with this type of financing, but i wanted to open up a discussion to see if other people are doing this, and if there is anything i am missing.

Thanks,