Seed capital - high risk with credit cards?

Question

I am hearing a lot about using credit financing for new investments in the event your credit score isn't shining. I am interested in the concept, but am hesitant to go further with this, as the risks seem quite high. Does anyone here have the skinny on Credit card financing for real estate?

Austin Fruechting · Answer

Two times this can work: 1) when BRRRR-ing a property and you will refinance before the interest period hits 2) when the cash flow can pay it off before the interest period hits.

I've done done both multiple times, and am actually currently doing it again for a portion of the rehab on a 22-unit portfolio. They key is (in either case) you must conservatively run your numbers and have a buffer to account for the unforeseen. If you really know your numbers then it's not risky. Risk comes from not knowing what you're doing.

Kris Bolzniak · Answer

Some people have a genuine fear of debt, nothing wrong with that. There is more than enough debt to grow around in today's economy.

Shiela Zhao · Answer

@Tyrel McAllister , I take it you're not a fan of debt? How can you live in the real estate industry an be uncomfortable with debt financing!?

Tyrel McAllister · Answer

Account Closed sounds risky as! Only for investments like rehabs that are very close to completion and you are in a bind. I wouldn't recommend using this as your primary source of funding!

Brent Coombs · Answer

I'm curious: living in New York, New York, just how many dollars are you looking to borrow with Credit Cards, to get your real estate investment portfolio started?...

John Krasner · Answer

I concur with Coombs there, NY, NY is hardly the cheapest place to invest. Where are you looking to invest?

Hank Wu · Answer

I have used this method as seed capital before to fund a flip. Works a treat, but it does take a small blow on your credit score. Just read the conditions very clearly and understand how you can transfer credit between accounts beforehand. Best of luck

John Krasner · Answer

I have begun working with seed capital, a company out of Nevada, and their product offering seems relevant to your situation. So long as you know the risks involved and the credit free periods, you should be alright.

Seed capital - high risk with credit cards?

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