Purchasing using credit cards

[Marquise Crampton]

I've herd about a technique for getting together funds by opening several credit cards and getting line increases until you have enough to purchase a property, then refinancing out. Sound like a good idea or bad. Has anyone tried this and what would be the fasted way to get the lines increased. thanks in advance

[Clinton Holmes]

Hi @Marquise Crampton

This is a topic that shows up on the forums quite a bit. If you just search credit cards, you will find a number of opinions on the matter.

As a rule of thumb, I would say it is a bad idea. Especially for amateurs. Why wouldn't you just do hard money instead? Yes, you might be able to get zero interest for X number of months with the credit card, but what happens when your rehab takes longer? As soon as that introductory period is over, the interest rate on that credit card sky rockets to anywhere from 15-25%. Then you have ruined your credit score and you will have collections agencies harassing you. 

At least with hard money, you can try to work with the lender. Show them why the job is taking longer, and they will probably work with you. Remember, they want your deal to be a success, so you come back and lend from them for another deal. The credit card company wants you to fail so you become their indenture servant.

For the average investor, this is definitely something I'd avoid. 

Just my two cents, good luck!

Clinton