Buying a Foreclosure on credit cards?

Rehabbing & House Flipping
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Buying a Foreclosure on credit cards?

Bill Briscoe
Accountant · Thornton, CO · Member since 2011 · 170 posts · 33 votes

I saw an article on it here:

https://www.biggerpockets.com/renewsblog/2013/03/16/real-estate-credit-card/#comment-230238

and one guy in the comments said he would purchase entire homes via credit cards.

So financing the Rehab costs thru a Credit Card could be a no brainer, if you have high enough limits and low rates.

But what about the actual purchase of a foreclosure? I can probably scrape together a combined credit limit of $200K or more between my wife and I over several cards, so when would that make sense on an 80K purchase? It seems like if I could avoid doing a mortgage entirely then I can skip the junk fees – appraisal, points, underwriting, lender's title insurance, etc, etc.

But instead, I expect I would have a 2-3% vendor fee to pay by CC, right? And how would this work? Paypay, Plastiq, Venmo? Who is buying homes using a credit card at the title company? If I could classify it as a purchase and not a cash advance, it would at least qualify me for the points, which would offset some of that 2-3% vendor fee, and get me to Diamond status at Hilton or Sheraton real quick.

Is anyone doing this now?

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James MaraditsPro Member
Real Estate Broker · Cleveland, OH · Member since 2015 · 239 posts · 224 votes
9y

I've gotten multiple cards with 0% APR for the first year promotions. One of them even came with a book of checks linked to the account. If you could write yourself a check with the funds to use and pay it back within the no interest period you'd be golden.

You can usually get a card at the big box hardware stores with a 6-12 month 0% APR intro period and use that to fund your materials as well.

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  • Linda S.
    Investor · Richmond, VA · Member since 2016 · 1k+ posts · 2k+ votes
    9y

    @Bill Briscoe@ Most banks/title companies require a wire transfer or money order, so the financials form must be in a liquidated state. 

    You'd have to do a cash advance or write yourself a check from your credit card.      We do the bulk of our remodeling costs  through credit cards with low fees, or 0% intro fees, and then we do an equity loan to pay it off.    Essentially it is an easy to way to get money and buy you time, but not a long term strategy. 

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  • Jeff B.
    Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
    9y
    Originally posted by @Linda S.:

    @Bill Briscoe@ Most banks/title companies require a wire transfer or money order, so the financials form must be in a liquidated state. 

    You'd have to do a cash advance or write yourself a check from your credit card.     

     At 24% interest for cash advances?? ouch.

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  • Linda S.
    Investor · Richmond, VA · Member since 2016 · 1k+ posts · 2k+ votes
    9y

    When we have utilized it, it was 0% interest for a year and a 3% fee, and in 1 year we'll do the HELOC... obviously 24% would be insane.

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  • Jeff B.
    Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
    9y
    Originally posted by @Linda S.:

    When we have utilized it, it was 0% interest for a year and a 3% fee, and in 1 year we'll do the HELOC... obviously 24% would be insane.

     I've got a drawer full of cards and NONE will go 0% for one year - - heck, they nick you after 30days of the transaction and my FICO is above 800 too.

    Share with us please, where can we too get such favorable cards?

    0Reply
  • Bill Briscoe
    OP
    Accountant · Thornton, CO · Member since 2011 · 170 posts · 33 votes
    9y

    US Bank just approved me for a 15 month 0% interest business card  offer.  I haven't received the card so I don't know what the credit limit is yet.

    1Reply
  • James MaraditsPro Member
    Real Estate Broker · Cleveland, OH · Member since 2015 · 239 posts · 224 votes
    9y

    I've gotten multiple cards with 0% APR for the first year promotions. One of them even came with a book of checks linked to the account. If you could write yourself a check with the funds to use and pay it back within the no interest period you'd be golden.

    You can usually get a card at the big box hardware stores with a 6-12 month 0% APR intro period and use that to fund your materials as well.

    1Reply
  • Jeff B.
    Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
    9y
    Originally posted by @James Maradits:

    I've gotten multiple cards with 0% APR for the first year promotions. One of them even came with a book of checks linked to the account. If you could write yourself a check with the funds to use and pay it back within the no interest period you'd be golden.

    You can usually get a card at the big box hardware stores with a 6-12 month 0% APR intro period and use that to fund your materials as well.

    ZERO % APR during the first year applies to PURCHASES, not cash advances.  Like I said, I've got a drawer full of these cards and did balance transfers all the time (which are treated as purchases).

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  • James MaraditsPro Member
    Real Estate Broker · Cleveland, OH · Member since 2015 · 239 posts · 224 votes
    9y
    Originally posted by @Jeff B.:
    Originally posted by @James Maradits:

    I've gotten multiple cards with 0% APR for the first year promotions. One of them even came with a book of checks linked to the account. If you could write yourself a check with the funds to use and pay it back within the no interest period you'd be golden.

    You can usually get a card at the big box hardware stores with a 6-12 month 0% APR intro period and use that to fund your materials as well.

    ZERO % APR during the first year applies to PURCHASES, not cash advances.  Like I said, I've got a drawer full of these cards and did balance transfers all the time (which are treated as purchases).

    You may very well be right, but I could swear I just got a booklet of "Convenience checks; Consolidate high interest at a 0% APR intro rate." Regardless, there is probably a way around it using paypal or something along those lines if you're crafty.

    1Reply
  • Jeff B.
    Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
    9y

    @James Maradits  Sure - - those checks are considered as purchases, but  they look at the PAYEE and verify that you are consolidating another creditor.  Write one to an escrow company for a deposit, downpayment or closing costs and you'll be sorry.

    Remember, these companies are in business to get into your pockets and not substitute for bankers.

    Funds to a closing company are typically via a Cashiers Check or Wire Transfer and closing will be delayed until any other form of payment has cleared collection, Paypal will hurt too.

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