So for example, let's say a friend of mine wants to get involved in real estate but doesn't have the time, knowledge, experience, or resources to do it very well.

You have to purchase at least as much as your net sale and use all of your net cash.If the scenario involved a $450K sale. 

However I am struggling to understand and evaluate the risks involved with cash out refinancing 2-5 years down the line.

I'm not completely foreign to the construction process as I grew up around a family that was involved in home building, but due to living in another state I can't really lean on them for the direct, hands-on guidance. 

I don’t want much if any involvement because I’ll be doing other things.  

So the one's on the sidelines that did not get involved, and or are not coming from a position of strength--- now no longer can invest. 

I have a bit of experience with co-living investors, having been involved in several co-living investments for five years.

Processes have been set up to provide a degree of protection to parties  involved in subject to transactions.  

Closing CostsMake sure you also budget for closing costs, which are a collection of fees and payments made to the various parties involved in your transaction.

There's many other options in real estate such as syndication and note investing depending on your level of involvement.