Cash Out Refinance Option??

[Ashley Jemison]

Anyone have some insight on exactly what this option is & the benefits it has?

[Chris Adams]

A cash out refi is any time a property is financed or refinanced where the equity from the property is converted to money going to the owner. I do this regularly by buying distressed properties and rehabbing without a loan. Then once the property is finished and rented I have the bank finance the property at around 80% of the ARV ( after repaired value)

The benefits are essentially tax free income since your received money from a loan. You free up your invested capital to do the next project.

Don't start doing the money dance just yet. These loans are not the easiest thing in the world to get done. You need a lender that is willing to do this type of loan and most banks are very conservative on this. Most banks will want a new property to season for 6 months before they consider this type of financing.

I do 90% of the rehab work myself so that banks give me value on my sweat equity, also I have a history and a construction company.