Cash-Out Refinance for Investment Properties

What this program does

You own a rental with meaningful equity. You want that equity working in your next acquisition, not sitting idle in a property you have no intention of selling. A cash-out refinance replaces the existing loan with a larger one and hands you the difference at closing, in cash, tax-deferred — because loan proceeds are not income.

Because this is investment-property lending, qualification runs on the property's cash flow rather than your personal finances. No W-2s, no tax returns, no debt-to-income test. The property has to carry the new, larger payment at a minimum DSCR of 1.05x, and it has to appraise.

How much cash you can actually take out

Leverage goes to 80% of appraised value. What lands in your pocket is that figure minus the existing loan payoff and closing costs.

A worked example. Your rental appraises at $400,000 and you owe $180,000. At 80% LTV the new loan is $320,000. Subtract the $180,000 payoff and roughly $9,000 in points and closing costs, and you net about $131,000 at the table.

Now check the DSCR, because the appraisal is only half the test. The new loan has to service itself. At 7% on a 30-year fixed, $320,000 carries a principal-and-interest payment near $2,130 a month, or about $25,560 a year. If the property's net operating income after taxes, insurance, vacancy, and management is $30,000, the DSCR is 1.17x and the deal clears comfortably. If NOI is $25,000, the ratio is 0.98x and the loan amount has to come down until it clears 1.05x — which means less cash out than the LTV alone suggested.

Run both tests before you order an appraisal. Borrowers who only check LTV are the ones surprised at underwriting.

Terms at a glance

Seasoning and the BRRRR exit

Seasoning is how long you must have owned the property before we will refinance against its current appraised value rather than what you paid for it. Our standard is roughly six months of ownership.

That number matters most to BRRRR investors. The strategy — buy, rehab, rent, refinance, repeat — depends on refinancing against the post-renovation value, not the distressed purchase price. Buy a house for $150,000, put $50,000 into it, and get it appraised at $280,000: at 80% LTV the refinance is $224,000 against a $200,000 basis, which returns your capital and then some. But that only works once the seasoning requirement is met and the property is leased with a signed lease in hand.

Sequence it deliberately: acquire and renovate on a Fix & Flip loan, lease the property, let the seasoning clock run, then refinance here. Our BRRRR analyzer models the whole sequence, including whether the refinance actually returns your capital, before you make the offer.

What we need

The property address and current loan payoff, the lease or leases in place, the last twelve months of operating expenses, entity documents, and evidence of reserves — nine months of principal, interest, taxes, insurance, and association dues on the subject property. If you already carry open loans with us, plan on nine months of reserves for each of those as well as the new one. We order the appraisal, which includes a 1007 rent schedule establishing market rent.

There is no credit pull to get a quote and no upfront fee. Send the numbers and we will tell you what the property supports before anyone spends money on third-party reports.