The Hard Way: How I Learned the Difference Between a Credit Card and a Charge Card

Back in 2001, I was still relatively new to real estate and feeling confident after some early success. With a little extra cash, I decided to invest in two run-down four-plexes. The price was too good to pass up, and I figured I could rehab them, raise the rents, and build some solid equity.

At the time, I had an American Express Gold Card. For those who aren’t familiar, it’s a charge card, not a credit card—which means the full balance is due at the end of each month. No carrying a balance. No minimum payments.

Fast forward to March 2003—business was booming! I had 11 properties under contract, all scheduled to close in April. Feeling confident, I started pouring money into rehabbing the four-plexes, thinking that by the time my commissions hit, I’d be sitting pretty.

I racked up over $20,000 in renovation expenses on my AmEx.

Then it happened. Seven of the eleven deals fell through.

If you’ve ever seen Honeymoon in Vegas with Nicolas Cage, there’s a scene where he almost has a heart attack losing with a straight flush. That’s exactly how I felt. Losing seven deals in a month just doesn’t happen. But it did.

Two of those deals were double-sided, meaning I lost four commission checks right there. The other three? Who knows—bad luck, bad timing, or just one of those things in real estate. Either way, my $20K balance was due, and my commission checks were gone.

That phone call to American Express? Let’s just say it was the most humbling ten minutes of my career. I was stretched way too thin, just like so many agents today who live commission check to commission check.

My reality check?
📌 Filet mignon in the summer, ramen noodles in the winter.
📌 Agents buying a new Mercedes to impress clients but struggling to fill the gas tank.
📌 Living on borrowed money, assuming the next closing would save me.

I learned the hard way: Don’t spend the money until the check clears. Not just when it’s in your account—when it has actually cleared.

In this business, anything can happen.
❌ A client can pass away before closing.
❌ A house can burn down (or get struck by lightning) the week before funding.
❌ A buyer can back out for the strangest reason.

If I could go back, I’d do one of two things: Wait until I had the full funds in hand OR start small.

Take it from someone who’s been there—cash flow is king. Don’t put yourself in a position where a few failed deals put you in financial freefall.