First and foremost, with a business credit card you can easily separate personal and business expenses. This makes it easy during tax time since all your real estate related purchases will be on your business credit card.
Secondly, you can separate personal and business credit history with certain types of business credit cards. Ideally, you want to acquire business credit cards that solely report payment activity to the business credit bureaus. This protects your personal credit since your company’s revolving debt does not report to your personal credit reports.
Additionally, many card issuers offer 0% financing for 6-18 months on purchases. This interest free money can be a real powerful tool if used properly. For example, let’s say you have a rehab with $20k in renovation costs that you put on your business credit card with 0% APR for 6 months. You complete the renovation and sell the property at a handsome profit in six months’ time. In this example, you used $20k in credit with no interest to renovate the property.Another benefit from acquiring multiple business credit cards for real estate investing is in establishing multiple banking relationships. Each relationship you establish with a bank card issuer may lead to other benefits such as future credit limit increases, targeted business credit offers, and other funding opportunities.
What are the benefits using business credit cards in real estate?
- Preserve your cash (OPM)
- No longer use personal credit cards
- No longer impact personal credit
- No longer impact credit utilization
- Get sign up bonuses, cash back and/or rewards
- Build business credit
How do you use business credit cards as a real estate investor?
There are many types of business credit cards that meet specific expenses and needs for a real estate investor. For example, if you are a fix and flip investor you may want to consider the Lowe’s Business Rewards card from American Express.
This particular card offers 5% cash back on purchases at Lowe’s for the first 6 months of account opening. After that, it offers 2% cash back with no annual fee.