Why Cash Out a Rental Property?
Your rental property has probably appreciated significantly. A cash-out refinance lets you access that equity as tax-free cash — without selling the property or losing your rental income stream.
Investors commonly use cash-out proceeds to:
- Purchase additional investment properties
- Fund renovations to increase rent or resale value
- Consolidate higher-interest debt
- Build cash reserves for their portfolio
- Finance a fix-and-flip project
Cash-Out Refinance vs. HELOC: Which Is Better for Investors?
A HELOC (home equity line of credit) on an investment property is nearly impossible to get from a conventional bank. Most banks only offer HELOCs on primary residences.
A cash-out refinance replaces your existing mortgage with a new, larger loan — and you receive the difference in cash at closing. This is the standard approach for non-owner-occupied property equity access.
How Much Can You Take Out?
For investment properties, lenders typically allow up to 75% LTV (loan-to-value) on a cash-out refinance. So if your property is worth $400,000 and you owe $150,000, you could potentially access up to $150,000 in cash.
We offer asset-based cash-out programs with no income verification — qualify based on the property’s value and rental income, not your personal tax returns.
Qualifying Without W-2 Income
Traditional lenders require extensive income documentation. We don’t. Our non-QM cash-out programs qualify investors based on:
- Property value (LTV-based)
- Rental income (DSCR qualification)
- Asset depletion (for retirees and high-net-worth investors)
Credit score minimum is typically 620, though better pricing is available at 680+.
When a Cash-Out Refinance Isn’t the Right Move
Cash-out refinancing isn’t automatically the best option just because equity is available. It’s worth thinking twice if any of these apply to your situation:
- Your current mortgage rate is meaningfully lower than today’s market rate — refinancing resets your entire loan balance at the new, higher rate
- You only need a small amount of cash — a HELOC-style second lien (where available) can sometimes access equity without disturbing your existing first mortgage
- The property’s rent doesn’t comfortably cover the new, larger loan payment after cash-out — this is exactly what DSCR underwriting is designed to catch before you close
Cash-Out Refinance vs. Simply Selling
Selling converts 100% of your equity to cash but ends the property’s rental income and typically triggers capital gains exposure. A cash-out refinance lets you access a portion of that same equity — at high leverage — while keeping the property, the rental income stream, and any existing depreciation schedule intact. For most active investors, refinancing wins unless the property itself is genuinely ready to be exited from the portfolio.
A Note on Taxes
Cash-out refinance proceeds are loan proceeds, not income, so they aren’t taxed the way a sale’s capital gain would be. That said, tax treatment depends on your specific situation and how the funds are used — this isn’t tax advice, and we’d always recommend confirming the details with your CPA before finalizing a refinance strategy built around a specific tax outcome.
Real Example: Cash-Out Refinance Math
A rental purchased five years ago for $280,000 with a current balance of $190,000 has since appreciated to $420,000. At 75% LTV, the maximum new loan is $315,000 — enough to pay off the existing $190,000 balance and put roughly $125,000 in cash toward the down payment on a second property, all without selling the original asset or losing its rental income.
Start Your Cash-Out Refinance Today
We close cash-out refinances in as little as 10–14 business days. See our Investment Property Cash-Out program or apply now for a free quote.