BRRR'd a House w/Credit Cards. Now No More 0% interest BT offers!

[Gabriel Green-Lemons]

Hey BP family! 

I've run into a bit of an issue. I bought & rehabbed a house from 1000 miles away using my personal credit line. Now there are no more 0% interest balance transfer offers available from one of my banks.

Earlier this year with the help of my “Core 4” team on the ground (see David Greene’s awesome book Long Distance Real Estate Investing), I bought a single family rental property in Indianapolis, IN while living in NJ. I had it rehabbed, rented and refinanced into a long term loan within just over 3.5 months. I was all set to knock down the 4th “R” in that all-time-great RE investing acronym, B.R.R.R.R. Essentially, I was ready to “repeat” the process for those unfamiliar with the term.

There was just one BIG problem that I hadn’t anticipated…

One of my banks, at which my personal unsecured credit line is 40k, suddenly was no longer offering the 0% interest balance transfer promotion! This was unexpected because, even after the initial introductory period was over back when I first obtained the credit line, the bank continued to offer the 0% promotions again and again for years. When I realized what happened, I called customer service and humbly inquired about whether they would be willing to extend the 0% interest promotion once more given my stellar payment history with the bank. I reasoned that since I have never made a late payment and the bank made good money every time I used the balance transfers, they would be happy to reconsider. Unfortunately, I was wrong. I call it being optimistic, but in hindsight maybe I was being a bit naïve. I was told I still had the option to initiate a transfer, however, I would have to pay the 3% transfer fee and pay the variable 14-24% interest rate while funds were in use…

Just like that, 40k of capital to go out and buy assets and get them to cashflow……gone.

As a value-add real estate entrepreneur, I understand with every challenge encountered, there is a lesson to be learned and an opportunity to evolve. Evidently it is time for a course correction. I CAN NO LONGER RELY ON MY PERSONAL CREDIT LINE to fund my BRRRR projects. I need to look into other sources of lending, namely, private money. I just finished listening to Matt Faircloth's Raising Private Capital on audible, but I will be re-listening and taking detailed notes. I am a little dismayed with the short-term setback, but I welcome the opportunity for growth.

Is anyone else going through a similar situation?

[David Hall]

Banks are definitely tightening up their lending.  We are going to see less and less 0% interest options and more and more increases in interest rates.  This is actually a sign of a growing stronger economy.

I would suggest you shop around at different banks.  I called a few local credit unions and was able to secure $20,000 unsecured credit line at 8% interest and another $20,000 at 12%.  Not 0%, but not 20%+ either.  

There are plenty of investors doing deals with 20%+ interest rates as well. Although highly not ideal, you may need to find deals with more meat on the bone and keep the BRRRR going. I would rather make a little less and still acquire an asset then lose out waiting for lower interest rates.

Brandon Turner briefly mentions this on podcast #294 that people can spend a lot of time worrying about interest rates and potentially miss out on stellar opportunities along the way.