Refinance and cashing out

[Nick Ruffini]

Hi...I have a question about refinancing rental properties and pulling out money. 

Why do people force appreciation on a apartment complex, refinance it for the higher value and cash out the difference? I'm guessing because it's a non-taxable event VS selling it for the higher value down the road? Is that the main reason or are there other benefits?

I was thinking (merely for numbers sake) if I buy a place for $100K, force appreciation to $200K...hold it for 5 years and sell it, I make $100K. 

BUT 

If I if I buy a place for $100K, force appreciation to $200K and refinance it for $200K aren't I assuming an extra $100K in debt? This would only be a good plan if we plan on keeping the unit, right? Since the tenants will pay down that extra $100K with their rents?

Can anyone walk me through this...or suggest any posts/resources to check out about it?

Thanks

Nick

[Adam Roll]

@Nick Ruffini There is a million reasons people do it but I think, from what I have been reading, is people use that money to expand their portfolio. Taking your own money out and buying another property while maintaining equity in the property you cashed out on. I think overall the numbers have to make sense (and they often do) eg. your mortgage was $1000 before but now it’s $1400 after the Re-Fi, but you are still renting it out for more than $1400, and now you have a second propery bringing in cash now as well. I’m following this thread as I am still learning myself! And I could be way off on my logic so I’ll let the experts answer haha!