PLEASE PLEASE PLEASE DO NOT USE YOUR CREDIT CARD TO FINANCE YOUR REAL ESTATE INVESTMENTS!! Just the other day Julie reminded me of one of the first things we did at a "Get Rich Quick" real estate course we took in Toronto many years ago. During our break the real estate guru told us to call our credit card company and get our credit card limit raised and a percentage knocked off the interest rate!

The room was buzzing with excitement after the break. Everyone proudly told stories of getting credit of $5,000, $10,000 and even $20,000 added to the limits on their cards! And some even excitedly reported that they now would only be paying 18% interest instead of 21%.

What if something goes wrong with your investment and you end up paying that 18% interest on that $20,000 for years to come? Do you want me to do the math on that?

As for the other methods our newsletter readers asked us about...using home equity and vendor take back financing, it really depends on your goals and where you are right now in your life. If you're 65 and getting ready to retire, I am not sure I would use the equity in your home. But if you are under 50, and have $200,000 equity in your home, I would definitely consider a $50,000 home equity loan for a down payment on a real estate investment - assuming you can cover the extra payments if something goes wrong with your investment.

On a good deal, your rental income should pay for the monthly payment increase that the additional $50,000 home equity loan will cost you, along with all of the other expenses on the rental property. In this case, I think that it's a great source of money to use for a down payment on your first property.

As for owner financing. I love using owner financing. We've used it several times when we don't quite have enough for 25% down and the bank won't lend us any more than 75% on the property. Sellers are often happy to oblige with a loan for the difference. It's secured against the property, it gives them a nice guaranteed rate of return each month, and it's cash in their pocket each month. If your property will cover these extra payments and the vendor is willing to do it, then this is your best option. BUT - if I have no down payment at all, and can only get 75% financing from a bank, I wouldn't use this method to finance the rest.

We've bought properties for no money down. We've learned the hard way that no money down does not mean it won't cost you!