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If you are starting with little or no money in the bank, you can use credit cards to make your real estate investment dreams a reality. Whether you need extra cash for financing or to make improvements to your properties, using credit cards can make it happen. Most cards will allow you to make an interest-free loan to yourself--a cash advance. For a particularly attractive real estate investment that requires a down payment or fix-up work, this is the ticket. However, take this cash advance only if you can pay it back within the grace period that only some credit card companies offer (usually 20-25 days) so you won't get hit with high fees. At any rate, using credit cards in this way requires you to do your homework. Read the fine print and compare plans from many different companies. Then come up with and follow through on a workable plan for paying them off so you pay as little interest and as few fees as possible.
The interest-rate gameLook out for the letters piling up in your mailbox offering low-interest rates on "balance transfers." These offers promise that you can transfer funds to pay off the balance on a high-interest credit card you already have. While this might sound attractive, study the offer carefully. Are there charges associated with transfer balances? Is there an annual fee? How long is the rate good for and what does it increase to after the introductory period? This can work well if you are vigilant and organized. Keep a calendar so you'll know when the introductory cycle is over, then transfer the balance or pay it off in full before the rate goes up.
But don't get too many credit cards, especially if you know you have a tendency to overuse them. Too many cards can hurt your credit. A potential lender can look at your credit report, decide you could get in over your head and deny you a loan.
It never hurts to askBefore you accept any new cards, check out the ones you already have and call your credit card companies. They may be willing to make concessions to keep your business. Explain the details of the offer you are considering. Your current company may be willing to give you special rates or no-charge transfers. Use the creative techniques you've learned in the No Down Payment program to get the best deal possible. And while you're at it, ask that your credit limit be increased--even if only by $250 or $500.
For a wealth of information on consumer credit cards, check out www.cardtrak.com. Or take control of your credit and improve it by visiting www.carletonsheets.com and clicking on "FREE Credit Report & Score."
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