About six years ago, I started a small real estate investment trust with two investors. I acted as the managing partner, meaning I was managing the day-to-day decisions regarding our investments, and the other two partners were general partners and did not play an active role in the business. Essentially, our goal was to find a few investment properties that would generate cash flow.

We identified a triplex near downtown Columbia, South Carolina that seemed like the perfect candidate. After inspecting two of the three units (more on that later), we made an offer on the property, signed a purchase agreement, and each contributed a pro rata share of the down payment, expected repair budget, and reasonable rent. reserves into our newly opened business checking account.

A valuable lesson learned

When we purchased the property we knew it would need significant repairs. Most importantly, we knew the roof was no good and needed repairs immediately. We also allocated a budget for new carpets, curtains and other standard items in all three units.

I said before that I only watched two of the three units. The market was extremely competitive at the time, so if we had a chance to purchase the property we had to make an offer immediately. When I went to see the property with my realtor, the listing agent told us that we couldn’t see one of the apartments because the tenant was working the night shift as a nurse and was therefore asleep during the day.

I understand because I’m married to a nurse. I was told I could come back at night to view the apartment, but that didn’t work out for me as the property was almost an hour away from my house and we had a new baby at home. Since we didn’t want to risk losing the property, we made an offer and the seller accepted.

After closing, the tenant in the mystery unit decided to move out immediately, literally overnight the day we closed. They did not make any notification and did not even ask for the refund of the deposit transferred to us from the previous owner.

One look inside the apartment revealed exactly why they left so quickly. Frankly I’m not sure how anyone lives there. There was a thick layer of dirt all over the walls, appliances and other surfaces.

The house had the worst cat smell I have ever smelled and there was animal waste everywhere. Additionally, the apartment was completely infested with fleas; When I took two steps through the door, my legs closed covered in fleas up to my knees.

Long story short (it’s hard to describe the condition of the apartment in words), the apartment needed about $10,000 in renovations to make it rentable. I learned a valuable lesson for Never I would buy a property if I hadn’t seen it 100%.

To top it all off, about a week after we shut down, two of the three unit’s water heaters suddenly stopped working and the technician told us they were shocked the other one was still working. We replaced all three with a single water heater without a tank. In total, we were on the hook for nearly $14,000 in unplanned expenses before we even received a single rent check.

I used a credit card to spread expenses

we used some An amount was set aside from our reserves to help cover expenses and the tenant’s $1,200 deposit was applied to the bill. But this still left a huge gap, and we didn’t really need a small business loan that would add debt and interest expenses to our books.

The small business credit card that saved us was the Bank of America® Business Advantage Unlimited Cash Rewards Mastercard® credit card. The card allowed me to finance expenses and pay them interest-free for several months as rental income started coming in.

Some of our favorite small business credit cards have introductory APR periods. Check out our current list to see current offers.

We chose this particular card because we wanted a card with a simple rewards program, as well as the interest savings that are part of the welcome offer of many small business cards. As a small real estate partnership, we didn’t need the travel perks or purchase protections commonly offered by credit cards with relatively high annual fees, and we just wanted a card that earned a strong cash back rate on all purchases and no fees. annual fee.

To be clear, using this card did not “save” our business in the sense that we would have been broke without it. However, this prevented all partners from having to contribute more capital to the business than they wanted and prevented me from depleting our reserves to an uncomfortable level.

This is a great example of how credit cards can be a valuable financial tool for both individuals and businesses when used correctly and strategically.