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You might be surprised to hear that real estate and credit card rewards go hand-in-hand. In my experience, it’s one of the best ways to earn points & miles. Many rental properties are purchased with work to be done before they can be rented. Renovating my rental property helped subsidize a month-long trip to Japan and the Philippines. Learn how to maximize the return on real estate spending in this basic breakdown!
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The Key ~ Maximizing Financing
If you’re into real estate, you’ll know that there are a handful of ways to finance renovations and updates. All of them include having access to cash, like a Home Equity Line of Credit or a Cash-Out Refinance. The key is to maximize the return on using that money towards the rental property. Ultimately any Top Credit Card will provide a better return than simply using a debit card.
Credit over Debit
Using a credit card over a debit card (or cash) is the rule of thumb. Even a simple 2% cashback credit card can lead to huge returns. For example, let’s say the cost to rehab a property was $100,000. Using a 2% card will earn $2,000 in cash back. The work needs to get done regardless but I’m a lot happier knowing that I’m leveraging the financing in my favor. Simply charge everything each month to the card and pay it off using the cash from the financing. This is a great place to start earning credit card rewards as a real estate investor.
Earn 60,000 bonus points once you spend $4,000 on purchases within the first 3 months from account opening. The Chase Sapphire Preferred Card is one of our favorite Travel cards in our wallet.
- Earn a $50 hotel credit annually when you book a stay through the Chase Travel Portal
- Earn 5x UR when booking travel through the Chase Portal
- 3x on dining, select streaming services and online grocery purchases (excluding Target, Walmart, and Wholesale clubs). Also excludes in-store grocery purchases
Learn more about Travel Credit Cards here.
Better than 2%
To be clear, 2% is the minimum that everyone should be earning on every purchase. With a little organization, it’s easy to get returns as high as 25%. New credit cards often come with a welcome offer that ranges from 20-25% return on the initial spending requirement. For example, earn 100,000 points after spending $4,000. Assuming those points can be cashed out at one cent per point, that’s a $1,000 return on $4,000 worth of purchases. Now I certainly don’t recommend opening up twenty credit cards for one rental property but I’m sure that you starting to see the big picture.
I have a few different strategies that I use to maximize earning credit card rewards as a real estate investor. Depending on the amount of money required for the renovations, I’d suggest starting with one to two cards. Using the Top Credit Card Offers page, working down the list one by one.
The other strategy I suggest is to start with one small business credit card per property. It doesn’t matter if your real estate is officially registered for tax purposes since you can legally apply for a small business credit card as a sole-proprietor by using a Social Security Number. I like this strategy if you have multiple properties and want to link each one to a specific credit card. Of course, it’s fine to combine both strategies mixing personal and business cards between properties. Sometimes this makes the most sense depending on the current top credit card offers.
Rules of thumb
For this to work in your favor, it’s imperative that the credit card balances are paid off each month. Carrying a balance and paying interest negates all of the profits from the credit card rewards. In addition, always set up the autopay feature in the online banking portal to never miss a payment. On-time payment history is over 1/3 of what a credit score is calculated from.
Choosing a Card
There are literally hundreds of credit cards to select from which can be overwhelming. Thankfully we put together a list ranking the top Personal and Business Credit Cards based on their valuations. Once you find a card that you like, double-check the bank-specific rules to ensure that you’re eligible. Next, submit the application and notate it in a spreadsheet. If a particular card will be linked to the specific property be sure to add a column on the sheet.
Basic Pro Tip – Not all points & miles are credited equally. Just because an offer appears large does not mean that it’s worth more than a lower offer. When in doubt, reach out to us!
Basic Pro Tip #2 – Just because a card is marketed as a travel card and earns points doesn’t mean that it’s bad for cash back. Most travel credit card rewards can be redeemed for cash and often earn more than a marketed cash back card.
Earning credit card rewards and real estate go hand-in-hand. Whether you’re looking to earn more cashback or pool points for an awesome vacation, using the strategies above will undoubtedly support both of those goals. Have you earned credit card rewards as a real estate investor?
I’d love to hear down in the comments below or over in our 7,100+ Member Basic Travel Facebook Group!
Basic Travel Couple, LLC has partnered with CardRatings and MileValue.com for our coverage of credit card products and may receive a commission from card issuers. Editorial Disclaimer: Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities.
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