Can you imagine charging the entire downpayment on your new home to a credit card -- even if it’s hundreds of thousands of dollars?
As of last week, the answer became yes for condominium unit buyers at the 46-story, 478-unit Atelier condominium development on Manhattan’s West Side -- as long as they charged the full amounts to their American Express cards.
The Atelier, developed by The Moinian Group, a major commercial and residential real estate firm, is the first project in the country to allow purchasers to put their downpayments on a credit card. But American Express told Realty Times last week that "plastic" downpayments may become a lot more commonplace for high-end condo buyers. The company confirms that it is in active discussions with realty developers in several other cities to offer similar Amex downpayment programs.
The Atelier’s program works like this: Say you want to buy a $1.2 million unit with views of the Hudson River. You secure 90 percent financing and charge the 10 percent balance -- $120,000 -- to your American Express card.
Assuming your card is one of the standard green, gold or platinum versions, you’ll be expected to pay the $120,000 off on next month’s Amex bill. What’s the advantage of that? How about copious airline miles and points for a catalogue of other products and services that American Express calls "member rewards" -- none of which you’d qualify for if you made a traditional cash downpayment.
"The whole idea here," said American Express’s Christine Elliott, "is to create an amenity where none existed before." Developers of luxury condo projects build all sort of physical, tangible amenities into their units, she added, but for many well-heeled buyers the idea of earning enough airline miles to fly almost anywhere on the globe "is a very attractive intangible amenity."
The Amex condo program flows from the company’s ongoing charge-your-rent program at dozens of luxury rental apartment projects around the country. That program is active in 34 states and more than 100 cities. Kyle Curtin, vice president of strategy and business development for American Express, said "cardmembers have embraced the benefits of monthly rental payments on the card. Downpayments on the card bring the convenience and rewards to an entirely new level."
Elliott would not identify any of the developers in discussions, but said that like the Moinian Group, they already participate in the monthly rental charge program in their apartment projects. Joseph Moinian, CEO of the Moinian Group, said that for American Express card holders "the ability to charge their downpayment and earn rewards is incredibly appealing." Equally important, he said, the program "insures on-time payment and customer satisfaction."
Developers offering charge-card downpayments assume the role of merchant in the transaction, and pay a fee to American Express. The card company would not divulge the merchant percentage being charged to the Moinian Group at the Atelier.
Elliott said that besides the rental and condo downpayment programs, American Express also permits qualified investors in "exclusive resorts" programs -- where participants get access to multi-million dollar villas in deluxe resort areas around the globe in exchange for upfront fees of $300,000 to $1 million -- to charge those fees to their American Express cards.
"We are not unfamiliar with large amounts being put onto our cards," said Elliott. Amex charge cards typically come with no set limit to what a customer can charge during any given transaction. The company only gets in touch with a cardholder when the amount being charged appears to be grossly out of line with what the cardholder would normally purchase.
Besides upscale condo projects in other cities, might there be still further uses of American Express cards for real estate downpayments? For example, why not allow new home purchasers at preapproved single family subdivisions to put their downpayments on Amex plastic? Elliott would only say the firm is "actively exploring" other innovative uses in the real estate arena.
