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How much of your cash comes back out at the refinance? Enter purchase, rehab, and after-repair value to see what stays trapped in the deal.
The strategy is buy, rehab, rent, refinance, repeat, and the arithmetic that decides it happens at the refinance. Cash Left In = (Purchase + Rehab + Carrying Costs) minus Refinance Proceeds, where proceeds are after-repair value times the lender loan-to-value. A property bought at $300,000 with $60,000 of rehab and $10,000 of carrying costs has $370,000 in it. Refinanced at a $425,000 ARV and 75% LTV, the new loan is $318,750 and $51,250 stays in the deal.
The repeat step depends entirely on that final number, because it is the capital unavailable for the next purchase. A refinance returning everything is the version the strategy is usually described with. A refinance leaving $51,250 stranded is the version that happens when the appraisal comes in under the estimate or the lender caps LTV lower than the plan assumed.
ARV is the assumption the whole strategy rests on, and an appraiser sets it after the money is already spent. A 10% miss on a $425,000 ARV moves refinance proceeds by $31,875 at 75% LTV, which on this deal is the difference between most of the cash coming back and most of it staying in.
Seasoning requirements control the timeline. Many lenders require a holding period before they will lend against the new appraised value rather than the purchase price, and every month of that wait is carrying cost the deal has to fund.
The refinanced loan is larger than a conventional purchase loan on the same building, so coverage after the refinance is tighter than it would otherwise be. Pulling maximum cash out and holding DSCR above the lender floor are competing objectives on the same transaction.
Rehab budgets are estimates made before the walls are open. Cash left in moves dollar for dollar with overruns, and it moves against you during the same window the ARV risk is still unresolved.
The lender appraises the finished property and lends a percentage of that after-repair value, commonly around 75%, rather than a percentage of what you paid. The new loan pays off the acquisition financing and returns the difference as cash.
A screen that caps all-in cost at roughly 70% of ARV, so that a refinance at 75% LTV returns the invested capital. It is a filter for which deals are worth underwriting, not a substitute for running the actual refinance math on the actual terms.
Three usual causes: the appraisal came in below the ARV estimate, the rehab ran over budget, or the lender allowed less LTV than planned. All three land in the same place, which is capital stuck in a property instead of funding the next one.
A required holding period before a lender will refinance against appraised value rather than purchase price. It delays the point at which capital is recycled, and the carrying costs during that period come out of the deal.
The refinance step is where rates bite, because the larger cash-out loan has to stay above the lender coverage minimum at the new rate. When the rate exceeds the property cap rate, pulling maximum cash out and passing DSCR stop being simultaneously achievable.
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