Financing Real Estate Investments and Business Credit Cards
A Comprehensive Guide
Who doesn’t like credit card rewards? Who hasn’t dreamed of swiping their next real estate investment on their Business credit card?
While title companies sadly don’t accept credit cards, there are still ways to use your credit cards to pull cash for real estate investments. A quick word to the wise, though: These techniques may not cost less than more traditional loan sources or a business loan. Credit cards are usually expensive, but they also come with risks, from immediate cancellation to debt spiraling, credit rating, and a cut financial safety net.
Business Credit Cards
Business credit cards are a great financing option for small business owners, providing them with the flexibility to manage their expenses and make purchases on credit. Here are some of the key benefits of business credit cards:
Access to Credit
Business credit cards provide business owners with access to credit, which can be used to purchase equipment, pay for supplies, and manage daily expenses. This can help businesses to manage their cash flow and make necessary purchases, even when they don’t have the funds available in their business bank account.
Rewards and Cash Back
Many business credit cards come with rewards and cash-back programs, allowing business owners to earn points or cash back on their purchases. This can help businesses to save money and earn rewards for the purchases they make for their business.
Separate Credit History
Having a separate business credit card can help to build a credit history for the business, making it easier to obtain financing in the future. It also keeps personal and business finances separate, making it easier to manage and track business expenses.
Choosing the Right Business Credit Cards
Choosing the right financing option for your real estate investments or business needs can be a challenging task. To make the best decision, consider the following factors:
- Your current financial situation
- Your credit score
- The amount of money you have available for a down payment
- The repayment period and interest rate
- The purpose of the loan or credit card
By taking the time to consider these factors, you can decide the financing option that is right for your needs, helping you to achieve your financial goals.
The Best Way to Pay & Manage Your Bills is Through Plastiq.com
Whether you’re taking care of your rent or mortgage, making car payments, paying a contractor, or booking a private jet, Plastiq is the best way to pay. Plastiq is the only service that lets you pay for any business with your favorite credit or debit cards.
Pay any business without worrying whether they accept cards. Earn more points and cashback rewards by paying your most significant bills with Plastiq. Forget about late fees and penalties when you use your credit card to pay today.
Send payments in seconds with their easy-to-use website and mobile app. Enter any recipient’s details online, or submit a picture of your bill with our iOS app. All card transaction fees are 2.5% or less.
Send money and make purchases with Venmo.com
Pay family and friends in the US with a phone number or email, whether they have Venmo — they need to create a Venmo account to claim their payment. Find friends automatically by syncing your Facebook or phone contacts.
When you send money using your Venmo balance, bank account, debit card, or prepaid card, they waive fees, so it’s free. Their standard 3% fee applies to credit cards. Receiving money and making purchases in other apps is always free.
Use the prepaid debit card/money order trick.
This has been floating around the Internet for a few years and still seems to work. You buy a prepaid debit card and your groceries at a retail store and put the entire purchase on your credit card.
You then use the prepaid debit card to pay for a money order… made to yourself. Furthermore, you deposit it at your bank, and voilà! You have cash, whereas before, you had plastic.
Of course, the prepaid debit card itself might include a small fee, and the money order will probably cost $1. But if you can find prepaid debit cards with high enough balances, it may be worth the trouble.
Load up on PayPal “My Cash” cards.
Heard of these? A variation on the tactic above, they’re reloadable debit cards linked to your PayPal account. You buy them at retail stores and load money onto them, and that money then transfers to your PayPal account.
There are limits, of course. Each card can only be loaded with up to $500 at a time, and there’s a monthly maximum of $4,000. Each card also costs $3.95.
Still, it’s a valuable and cheap way to move $4,000 from your credit card to your PayPal account (and from there to your checking account) every month.
Pay directly for materials when renovating.
It’s impressive that more real estate investors don’t do this. To begin with, many contractors pad their materials estimates, so paying for labor only will save money immediately. After a contractor gives you a quote for a renovation job, tell them you’ll pay them for labor but will pay for the materials yourself.
Ideally, go with the contractor to the supplier to keep an eye on what materials you’re paying for. If you have 100 percent trust in the contractor, the cashier can call you when the contractor is at checkout, and you can give the cashier your credit card information.
Remember to continuously collect receipts from the contractor, check the materials purchased, and keep the receipts for tax season.
Use contractors who accept business credit cards.
Some contractors do it for a fee (usually in the 3-3.5% range). It can make sense to do this if you’re short on cash for the renovation project, or if your mortgage lender is willing to lend money for the purchase but not for additional renovations.
Just be sure to have several contingency plans to pay this money back to the credit card company. Quickly.
Use those business credit card convenience checks.
Many credit card companies periodically mail cardholders a few “convenience checks,” which are paid from the credit card balance. They come with fees, but sometimes these fees are mitigated by 0% interest for an introductory period. If the up-front fee is only 3-4%, it may be worth swallowing it in exchange for no interest payments due for the following year.
Stockpile cash and credit card debt, then balance transfer to 0% APR.
You may not be able to put your real estate purchase on your credit card, but you can put nearly every other expense on your credit card and stockpile cash for a few months. The problem with this method is that you rack up expensive credit card debt.
Fortunately, credit card companies offer enticing introductory 0% APR periods to persuade you to sign up. Once you’ve stockpiled the cash you need, open a new credit card with a long introductory 0% APR period for balance transfers. Then it’s simply transferring your credit card balance to the new card, where you won’t have to make interest payments for up to 15 months.
Consider just eating the cash advance fees.
Credit card companies typically charge 3-5% for cash advances, which is no picnic to pay. But mortgage lenders charge their nasty fees, from junk fees like a $495 “processing fee” to lender points. Conventional mortgage lenders also take 30–60 days to close, regardless of what the 24-year-old loan officer promises. Credit card cash advances are instantaneous.
And hard money? Most hard moneylenders charge just as much in points as the credit card, plus junk fees.
If you’re buying an $80,000 property with three $30,000 credit cards, it will probably be faster and cheaper to use a credit card cash advance than a hard moneylender. At least you’ll get some cash advance fees back in the form of reward points.
Credit cards are dangerous tools, but can still be powerful when wielded effectively. Because they serve as a backup source of funds for most of us, it’s doubly important to be careful not to overextend on debts and to have another emergency backup available. Real estate investors also need a primary and at least one contingency exit plan to repay these debts quickly.
Financing real estate investments and business credit cards are significant steps toward achieving your financial goals. By understanding the various options available, you can make an informed decision and choose the right financing option for your needs.
Whether you decide on a conventional mortgage loan, FHA loan, hard money loan, or business credit card, it’s essential to consider all the factors and make a well-informed decision. With the right financing, you can turn your real estate investments and business dreams into a reality.
BitX Funding offers 0% business credit card stacking for real estate transactions, helping investment property owners and small business owners to purchase real estate with ease and improve their business credit scores.
This financing solution offers competitive interest rates, and with the help of the small business administration, you can build your business credit and increase your chances of securing business lines of credit or a commercial real estate loan.
Contact BitX Funding today at 203-763-1430 ext 101 to learn more and boost your credit to buy real estate, improve your rental property portfolio, and grow your business with business credit cards.
Financing Real Estate Investments with Business Credit Cards