Newbie getting it right???!!!

I pay $26, 500 for a house on credit cards at 1.99% for the life of the loan.

I have an appraisal done and the appraised value is $63,000.

I have two bids by contractors at $10,000 to fix. (New windows, new stucco, new carpet, new paint, landscaping.

I pay for repairs with the same credit card deal 1.99% life of loan.

When I am finished I refinance from my credit cards to a 100% LTV mortgage for 30 years @ 7%. Payment $420. T&I $80. Rent $600. Positive cash flow $100.

I Paid $37,300 total(purchase price + repairs+costs). I get a check at closing for $63,000. I walk with $25,700. I still own the house, don’t plan to sell for 15 years, rent it out, and have a hundred a month to pay for vacancies & repairs.

Well?? Well??

Tell me if I got it right.

Howdy Runajam1:

Sounds like a no brainer deal. Can you do it 100 times in 3 years. You may not want to refinance at 100%. You could use the extra cash however to almost do another deal.

You may also want to do a 10 or 15 year loan and have the properties paid for faster.

What a plan. I am doing the same but having to pay 12% interest because of my past credit and putting down 10%.

Where are you located?


What is the area like? Is $600 a good rent on the property? Around here $600 will get you a rougher apartment in a rougher part of town (not a war zone though).

I agree with Ted if you can work out a 15 year loan, or perhaps a 30 year loan paid off in 15.

I do not plan to do a rental without a min. $250 profit monthly. Your looking at $1200 a year profit off the deal. Only $900 after taxes, unless theres a way to tax shelter money dedicated “for repairs”, but then its not really profit it is. To me thats just cutting it too close, 1 years rent will not even cover 1 major repair.

The other option may be an AHS warranty. This will run you about $350 a year on a primary residence, I have no idea the cost on a rental. They will repair or replace many big ticket items like water heaters, and AC. On the other hand they surely don’t cover a roof, which can cost you upwards of $4,000. Are you going to include any appliances? What if they break? Another huge expense.

What is a AHS warantee?

Wouldn’t you have to add private mortgage insurance to your monthly payment if you’re LTV is > 80%? I don’t know how much that would be though.

Better yet where do you get one? I thought my utility company offered one.?

I thought at 80% LTV is when mortgage ins, wasn’t needed.

runjam1 -

You can gt an 80/20 (100%) and not worry about the insurance.

Right, 80% is the cutoff, so if your LTV is above 80%, you’ll need to pay PMI. If you get and 80/20 as NoMoneyDown suggested, you wont need it. The 20 being in the form of a HELOC.

Howdy Runajam1:

AHS is American Home Shield. They are a warranty company that will sell you a warranty on the major appliances and ac or other stuff I believe.



I’m new to this as well and just had a question. Why would Runajam refinance from his/her credit card with a 1.99% interest rate to a 30 year with 7%? Besides of the tax breaks?? Isn’t the credit card a good way to finance the project? Especially with the interest rate.

The AHS is a really good suggestion for rental properties. Never would have thought of that.

I don’t know for sure if AHS offers for NOO properties or not. I would assume they do, maybe a little different plan.

I’m new to rehabbing and think your post is interesting. How does it work to get that much money at closing on your owe home? I have a house I am looking to rehab and your scenario sounds perfect, especially because I know this house would rent well. Here’s my deal…any advice?? I am looking for advice on how to proceed with a mortgage broker/company to close the deal, etc.

Purchase price $115,000
Estimated rehab costs $25,000
Estimated appraisal $185,000 to $190,000
Approximate rent $1400 month

What an awesome idea:

Question: How did you use your credit card to pay for the house and all the repairs etc.? Did you take cash against the card (I thought these are ususally really high interest rates) ?

I’m confused on who would take a credit card to close on the original deal? Title company?

I just did the same thing. I boughta house for $9000. I will have about 7 or 8k in repairs for a total of 17k on my credit card.(I do all the work myself except plumbing). I get 2.9% until April of next year so i have about 6 months to get it sold. I should be able to get about $40-$45k pretty easy as the house will appraise for aobut 60k…could stick around and try to get 55k, but i will be happy with 20 or 25k in my pocket.

to get a house on your cc, just call your cc company and tell them you want however much you need deposited into your checking account at 2 % for 9 months or whatever. If they dont want to do it, tell them you will use another card. Then they will do it.

The reason you want to refinance, is most cards only give you that low rate as an introductory period because if someone buys a car for 15k at 2% for lets say a year…chances are they are not going to have that paid off in that year and they will bump that rate to about 20%…also if your even 1 minute late on a payment they will fine you and then hike that rate. Chances are the CC company is going to make a butt load of interest on the buyers mistakes. Another reason you dont want to keep that much on a CC is, lets say you buy a house for $30k on a CC and your max is $35k…you are at 86% maxed out and that will hurt your credit score. And as someone else already said, its not tax deductable

Thank for breaking down the reasons for refinancing from the credit card Black95gt. Makes a lot of since now. And this has also been helpful.

Another reason to get off credit cards, is because their interest rates are charged on a daily balance, Meaning not fixed! that is why sometimes it seems you can’t get through paying them off.