Refinancing rentals: pull cash, lower your rate, repeat.

Cash out limits on rentals

Conventional cash out on investment property generally goes up to 75% of value on a single unit and 70% on two to four units. Pricing adjustments for investment cash out are significant, so compare the cost of the cash with other options.

Rate and term

Lower the rate or change the term, with a small amount of cash allowed, generally up to about 75% of value on investment property.

Seasoning: the rule that breaks BRRRR plans

For a standard cash out, you generally need to have owned the property for at least six months, and the existing loan usually needs to be about 12 months old. Timing also decides whether the lender uses your purchase price or the new appraised value. Plan your refinance date before you buy.

Delayed financing: cash buyers' shortcut

If you bought with cash, conventional delayed financing can let you do a cash out refinance within about six months to recover what you paid, without the usual seasoning. It's limited to what you put in, documented, plus costs.

Buy, renovate, rent, refinance

This is how I started in 2011, when lending was tight and growing one property at a time was the only way forward. The sequence: buy below value, often with cash or a short term rehab loan, renovate, place a tenant, then refinance into long term financing based on the new value. The refinance is where it works or fails. Know what the property needs to appraise for and rent for, and when you'll be allowed to use the new value, before you buy. For the rehab phase, see fix and flip loans.

Conventional or DSCR for the refinance?

Conventional usually costs less if your returns support it and you're under 10 financed properties. DSCR often has more flexible seasoning and qualifies on the rent. Many investors use DSCR for the refinance on newer deals and conventional where it fits. See conventional vs DSCR.

Cash purchase, cash back

Andre bought a duplex for cash at auction, renovated it and leased both sides. Within six months, a delayed financing refinance returned most of his purchase price, which he used toward his next property.

The seasoning surprise

A newer investor bought with a hard money loan, renovated in three months and expected to refinance on the new value right away. His lender would only use the purchase price until he'd owned it longer. Knowing that up front would have let him plan a DSCR refinance or hold a few more months.