Refinancing/cashing out your down payment.

[Jared Paul]

Hello Everyone,

I have a potential deal I'm looking into and I am trying to figure out the financing portion, more specifically, how I can buy the place and get my cash back ASAP to use on other investments (or just stay liquid).

Scenario: If someone is able to find a property (residential or commercial rental property) and buy that property for much less than the appraised value, can they then turn around and immediately refinance up to the typical 75% LTV ratio and pull out all of their down payment (and maybe more if they get a really good deal)? Or better yet, can they do it all in one closing?

For example:  3-family residential building purchased at $100,000 with a 25% down payment.  Property appraises for $200,000.  Can you then immediately refinance up to $150,000 loan and pull out the $75,000 difference between the two loan amounts.  Thus, giving you your down payment back, netting you a profit of $50,000, and giving you ownership of the property?

Thank You,

Jared