All Forum Posts by: Blesson Biju Alexander .

Refi means refinancing, which means basically getting a new mortgage and the funds from that are used to pay off your original mortgage.  (Even if you had no mortgage it is called refinancing.)

If you got a mortgage for the same amount, you’d just basically be replacing one for the other. You might do this because the interest rates are better, for instance.

Cash out is a colloquialism that refers to getting a bigger mortgage than your original and you pocket the difference.  If the terms are basically all the same, but just the amount of the mortgage is bigger then you’ll obviously have a bigger mortgage payment every month. That is  fine when you collect enough in rent to cover that and all other bills.  Hopefully you still have a little left over after all this that actually goes into your pocket, that’s called cash flow.

Now you can take that money from the cash out refi and use it as a down payment for another investment. And so on and so on.

You’ll have to speak with your lender to find out what percentage of the value of the house you can get a new mortgage for.  Let’s say it is 80%. In your case 1,20,000 using your notation or 120,000 using American notation. 60,000 would be used to pay off the original mortgage and you’d pocket the other 60,000 (minus some fees). And you’d have a bigger monthly payment. 

@Blesson Biju Alexander .

Welcome to the BiggerPockets community! No matter where you stand in your real estate investing journey, BiggerPockets is the ultimate resource for all of your investing needs. I’d suggest starting out by networking with as many other investors as possible and be an active participant in the forums.

If you haven’t already subscribed to the BiggerPockets podcasts, do that ASAP. Look for meet ups in your area (virtual), attend free webinars, start reading as much as possible on any and all topics related to investing and real estate. Use the forums to help you search for the answers to all of your questions. If you can’t find your answers, then create your own post!

Feel free to DM me with any questions.

Good luck and get educated!

@Blesson Biju Alexander .

Welcome to the BP!

This is a great forum with very knowledgeable members that will help to guide you in the right direction, whether that is real estate sales, wholesaling, flipping, rentals, lending, self-directed IRA and Solo 401k investing, or tax and legal guidance. You will be able to share your story and receive plenty of helpful feedback from experienced members.

The site has quite a few tools that can be helpful for new members. For example, if you are looking to connect with other members near you, want to learn from people in a specific area you’d like to invest in, or have a desire to find people interested in certain topics, you could use the search feature here: https://www.biggerpockets.com/search/users

I really like the alerts feature that can quickly guide you to current topics that may be of interest: http://www.biggerpockets.com/alerts

@Blesson Biju Alexander .welcome to the BP community!

In your example, if the ARV is $200K, you may be able to get $140K in a new loan when you refinance.  You would use this $140K to pay off the $120K in purchase price + rehab.  (There will be closing costs involved in the $140K - you will actually get $140K minus closing costs in funds.)

This is overly simplified. There may be a seasoning period required to get a bank to loan based on the ARV. But this would be an ideal BRRRR.