Massive Credit Card Hack For Flippers!
Renovate your real estate flip without interest and no cash.
I wrote an article called Give Your Bank The Financial Finger and got a very interesting response from a mystery person named Trhodes. The name is all I know about this phantom of the credit world— a place where darkness reigns. I will refer to this apparition as TR from now on.
Let me quote TR (with permission):
“An even bigger finger? I only charge stuff to those 0% interest cards — y’know, 0% interest for 12–18 months introductory promo, then treat it like layaway and pay it all off in the allowed time frame. there are even cards that will let you have 0% interest for charges over $500 for six months all the time no promo. Hehehe! They hate me!
I flip houses as a side hustle and everything goes on the 0% interest cards then BAM! 4 months into it I sell the place and pay off the charges, then buy another and do it again!! So the banks and their credit cards are financing my retirement for free! And they keep raising my credit lines to get me to buy more at 0% interest!! … Works like a champ and the banks REALLY hate me!!…
And all this actually improves my credit rating! So I’m gaming the system of the con artists and sleeping just fine thank you.
— Trhodes
Wow, I am amazed.
The Game Of The Flip
I would like to mention that flipping real estate is a game I don’t play. I don’t have the stomach for it. I have bought my fair share of fixer-uppers, but I have never flipped them. To flip real estate you need to make sure you get in and out quickly because if you get caught holding the property for any length of time you will either lose money on interest payments, or you will have to rent the property. Also, property taxes and utility payments will eat into your profit as you hold the unit.
I have done the rental real estate thing for years, and all I want to tell you is that I just couldn’t take it anymore — and got out. The rental real estate industry takes a certain type of mindset which I could stomach at the beginning of my landlording journey, but eventually, I cracked under the pressure. I found the stress too intense. So I understand the appeal of the flipping mentality of getting in and then getting out — fast.
Taking A Closer Look
Let’s go back and take a closer look at what TR is doing with their real estate flipping methodology. When you are looking for a home to flip you are trying to find a property that has mainly cosmetic damage or is just in need of a freshening of its appearance. In its simplest form, the idea you want to follow is to find a piece of real estate that is visually unappealing, but structurally sound. Thus the dwelling is undervalued in the marketplace. By investing, hopefully, a relatively small sum of money into repairs and visually engaging upgrades, the flipper hopes to increase the value of the property and quickly sell it for a profit.
This is all standard stuff in the flipping industry. And it does make a lot of sense. But when you mix in the idea of not paying any interest for the materials needed to upgrade and polish the visual appearance of your newly purchased property, you have hit pay dirt. TR expands on their idea:
“Yup. Home Depot, Lowes, Ikea, PayPal (I’m serious), LLFlooring, CareCredit all run continuous 0% financing deals. Some offer longer times for more spending, like 24 months 0% interest if the purchase is over $1800 dollars. Comes in real handy when I’m buying appliances, cabinets, or other big ticket items. If you watch a lot of store cards are like that — Amazon recently did it for all purchases over $200 before Dec 31st!! They even politely tell you when the promo interest is about to run out so you don’t pay the back interest! I flip 3–4 houses a year using this method.”
— Trhodes
My Interesting Surprise
After discussing this idea with TR, I went to my mailbox. Guess what I found? Take a quick look below…
And this is no joke. Within an hour of chatting with TR about this, I go to my mailbox, and BAM here is my opportunity.
Yes, I get these letters all the time and I have never paid attention to them. I have a Home Depot credit card that I have used, occasionally. I usually just chuck these kinds of promotional letters into the trash.
But in the case of a nimble flipper, you can make use of deals like these, as TR suggests, to fund your reno-flip projects.
Buy your property and then have Home Depot, or a raft of other merchants who offer the same kinds of deals (see above), finance your repair and upgrade materials.
Making Use Of Interest-Free Offers
Honestly, I have never put these two ideas together before. I would guess that many people like TR are doing a similar kind of thing. There are other things you can do with these promotional offers as well. TR explains…
I’ve also been known to open a new account (0% for 21 months!!) and do my thing with it, then when the interest rates kick in, transfer any balance to another 0% promo card and stop using the first one. Needless to say I don’t get Christmas cards from those banks.
Are people like TR making money doing this kind of thing? Answer: of course. You must, however, be nimble and quick on your feet. This type of thing is not for the sluggish or the faint of heart.
This kind of reminds me of an old saying:
“Move like a mouse in a herd of elephants.”
— Unknown
The key, again, is:
- Get in (buy the property)
- Get Out (sell the property)
- And do it FAST!! (as in really really fast, no more than a few months as TR explained above)
Do Banks Still Make Money?
Are the banks and big-box stores making money making these kinds of offers? Again, the answer is: of course. So don’t think this is illegal or even unethical. The merchants want you to take advantage of their offers because they will make money in the long run. They use the law of averages. On average, most people won’t pay off their card on time, and the merchant, or lending institution, makes money from interest payments the consumer will make.
The Danger is Real
As I mentioned in my previous “Financial Finger” post, the banks are banking on you, the daring consumer or the courageous flipper, to screw up. The financial institutions, or even the merchants themselves, are waiting to catch you with your spindly little fingers in the financial cookie jar. As long as you don’t stub your toe, you can make money with this scheme.
For the hundreds, and possibly thousands, of people who use places like the Home Depot to finance their purchases at zero percent interest, there will be only one or two who actually uses the promotion to save or make money.
Not only does a promotion like this save you interest on your renovation expenses, but you also don’t have to tie up your cash in the materials. I think this is just brilliant.
There are many problems you could get into following a risky path, all of which means you end up paying the box-store piper. Yes, if you miss paying off the credit card on time, and you are hit with the interest penalty.
Have A Backup Plan
If I were going to attempt to do this, which in all honesty I don’t think I would, I would have a line of credit ready just in case. If I could see myself missing the credit card interest-free deadline I would use the credit line to pay off my credit card to reduce the amount of interest I pay.
Unfortunately, my interest-free ride would be over. I would be required to pay the interest on my line of credit. However, the line of credit interest payments would surely be much less than the credit card interest expense. So I would still be ok. I would live to flip another day, but I would have a few monetary cuts and bruises that would need to heal.
BE CAREFUL
So all I want to leave you with is, BE CAREFUL! If you attempt to do this make sure you have some sort of backup plan in place.
And, hey, I was talking with a friend of mine yesterday who just bought a trashed house. He is going to renovate it and just keep it for his own use. Don’t think you have to flip your real estate to make money. Most of the money I made in real estate was buying run-down properties, fixing them up, renting them out, and then much later selling at a profit. It is a much less time-sensitive project. But you do have to deal with tenants, and that is a different kettle of fish altogether.
But if you do wade into the murky waters of the flipper, I say with all sincerity: all the best with your adventures and best of luck to you. And don’t forget…
Luck favors the prepared mind.
— Louis Pasteur
Disclaimer: This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions. Did you actually read the above article? Are you seriously thinking of flipping a property? Hey, did you know the author of this article made his fortune in real estate and he did NOT do it flipping a single property? The risk is far too high. If the author was considering doing a flip he would do it by paying cash for the property and then having enough cash, on top of the purchase price, to pay for all his materials and expected utilities as well. So, if you have that kind of money, then go ahead and do a flip. The author would not do it otherwise. Now, there is money in flipping, but you really have to know what you are doing. It is not a game for the faint of heart. All my love and good luck. I can’t believe you read all this. Max.
