Can you buy a house with a credit card?

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dougf04
 
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Can you buy a house with a credit card?

Postby dougf04 » Thu Jul 21, 2011 2:13 am

Here's the scoop. I am looking at buying a house with a credit card. Not something terribly expensive, more like the run down fixer upper foreclosures in some of the less desired urban areas i.e. Detroit. This would not be to live in but to hold on and rent it out.

I keep reading articles about houses that are as much as a Buick and I figure why not buy a few? With 0% checks from my credit card I could shuffle the money around and pay next to nothing on it. That would be cheaper than getting a mortgage on an investment property right because those have higher rates.

Doug


LTomBerry
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Postby LTomBerry » Thu Jul 21, 2011 3:26 am

I don't see why not. Since there is no mortgage involved I can't see why anyone would object. Normally I would wonder what seller would accept a CC transaction for that amount, considering the interchange fees. But if they are getting a check, no problem there. I'll throw out a few caveats though:

1) Fixing up can sometimes be more expensive than you think.
2) Anytime you buy real estate in a volatile market, you run the risk of depreciation, although it seems to be rock bottom in your situation.
3) What are you going to do after the 0% deal on your checks expire? Sell or keep? Can you find a buyer?
And if you've never been a landlord before (speaking from experience here)
4) Some renters can be deadbeats & not pay rent, then milk it for everything they can while you go through the eviction process.
5) Maintaining the properties & keeping the tenants happy can take time and money. Do you have the time to deal with fixing/maintaining stuff or pay a property manager to do it?
6) What to do if you can't find renters?
I'm sure you've thought about these aspects already or else you wouldn't be asking the question here. So I say what the heck, go for it. If you are willing to put in the time and effort to fix them up, and play landlord for your tenants it might be worthwhile.

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Mogul of Pineapples
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Postby Mogul of Pineapples » Tue Aug 02, 2011 11:16 pm

Good points LTomBerry.

dougf04- Can you clarify your question. Do you mean using the 0% checks or actually asking if a seller or lender accepts credit cards for the purchase of a house?
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dougf04
 
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Postby dougf04 » Thu Aug 04, 2011 3:17 am

Sorry for the delay folks been busy as a bee with work lately. Those 6 questions are all important and I am not finished doing my homework yet, I admit. Because I wouldn't be buying in my area a property management company would be a must. Are you a landlord? What is the worst story you have had from a tenant? You damn bet I am scared of a tenant trashing the place and dragging out the eviction process. Not to mention the folks that rent in those depressed markets tend to more often be that type. This is what I would have to buy a house dirt cheap to accommodate for the risk.

For the payment I know it may be a far out idea but it would be great to find a seller or intermediary company that accepts credit card payments directly for buying a home. I'm not sure such services exist but if the seller is motivated paypal could always be a way to get that done I suppose.

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Mogul of Pineapples
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Postby Mogul of Pineapples » Thu Aug 25, 2011 12:51 am

Normally I would say no dice to this but in times like these, it's a buyers market and sellers do have to accommodate. If you found an intermediary company and this type of purchase was permitted, then you could probably even convince the seller to pay the fees for it. However make sure you check with your credit card company that buying a house is allowed. It might violate something in the cardholder agreement.
Disclosure: I am a moderator/paid staff of this site, which does have advertising relationships with some credit cards that are discussed and linked to. Regardless, anything I say is my honest opinion.

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Postby JNK » Sun Aug 28, 2011 6:23 am

Unless you could guarantee that the amount could be paid back - even from your own pockets - if the worst should happen, I vote, "No way in hell unless you like the idea of living with a bonfire being lit under your ass every day until the entire amount is paid back in full."

There is a reason those houses are so cheap - buyer's market or not - and if they and their potential tenants can't pay you back and especially if you're not the one overseeing the entire deal from start to finish, you're SCREWED. My older sibling got involved in something similar - without using a credit card at the beginning - and where the project wasn't a complete failure, they took a substantial enough loss along with a few major hits on their credit report. The money, thankfully, was something that could be earned back so it wasn't so awful, but my sibling definitely paid a price for the failure.

And using PayPal? NO. NO, NO, NO, a million times NO! Seriously, are you crazy? If you're getting involved in real estate, you MUST take the legal route because it is the safer route for you, for the potential middleman, and for the seller. Not to mention PayPal's service is riddled with backend loopholes and their customer service is nothing short of questionable at times and refunds and fraud problems can be the nightmarish to deal with. They are a service for online transactions like eBay or online stores, but NOT for something as serious as a house or a car.

As secure as they claim to be and as much as they say they weed out the fraudsters, THEY ARE NOT because otherwise, how could I have customers buying from me whose PayPal personal names are, "The Sandman" and "Grim Reaper" and "Backyard Cowboy"?

Furthermore - and this has happened as I was involved in this before when I participated in a group order in a community I once participated in - there are plenty of cases where someone has used PayPal to collect money from people.... and have managed to spend the money/shuttle it elsewhere and run off to never be seen again with the money being completely lost and untraceable and with PayPal basically saying it can't do anything about it.

If your third party took your money via PayPal and ran off with it without doing what they should have done, do you think PayPal would be able to help you get it back? Especially if the other person might argue that they DID do everything and provided fraudulent evidence? I would vote, "NO."

So PLEASE.

Of ALL possible money-transferring services to use, DO NOT EVER USE PAYPAL for any amount over anything you could afford to lose and lose forever.

You need to keep a tight watch on that money AT ALL TIMES and keep tabs on any/all third party members involving in the whole process and keep legal documentation of ALL of it.

That said and ranted and given that you actually could use those checks or the card to somehow pay for the house:

1) If you can't afford to pay off the house yourself without the help of those checks, how long can you do those promotional BT offers (because that's what those credit card checks are for) and if you fall down on your luck, how many more times can you keep transferring those balances to favorable credit lines that charge little to no interest?

2) Are you absolutely ready to face the potential of failure and along with it, the potentially damaging affects on your credit and possibly your reputation and person?

The market for what you're doing looks lucrative and I have seen success from others who have done it. But as with anything that is lucrative, there are always predators out there preying on people who have neither the experience nor the knowledge about what they're getting themselves into and if you yourself can't be there to personally oversee everything and meet everybody involved, the likelihood is that much greater and the damage that much more potentially catastrophic.

I would definitely suggest more homework before jumping in.

I have seen more than one someones jump in and they WERE well-informed before jumping in and in more than one case, one of them WAS taken advantage of owing to their lack of attendance and the person/company who took advantage of them was supposedly very reputable.
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ooxs
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Postby ooxs » Sun Sep 11, 2011 10:08 am

LOL you’re trying to catch a falling knife.

SteelReign
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Postby SteelReign » Fri Sep 16, 2011 7:37 am

Imagine the cash back on a purchase like that! Even 1% would yield over $100...

ooxs
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Postby ooxs » Sat Sep 17, 2011 10:34 am

Steel LOL imagine after you miss a couple payments and the default rate is 30% :-)

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Postby JNK » Mon Sep 19, 2011 5:25 am

Or imagine you're sending your payments with the credit card thinking they're going to where they're going - paying the house, but the funds are actually being embezzled by the person on the other end whom you can't see and one day, you get a phone call telling you that you have mortgage payments that are overdue.

You are now OUT of that money you paid and now, you will be OUT again on money you still owe owing to the mishandling of the funds.

You call your credit card company.

You think they'll help you?

There's a good chance that they won't owing to how risky the venture was in the first place which places you at full liability.

Just - NO.
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