Looking for clarification on cash-out refinance (BRRRR)

[Vinh Nguyen]

Hello all, 

I just finished reading the BRRRR book by David Greene. According to the BP podcast and his book, they all stated that cash-out refinance is the best thing ever for real estate investors but they all seem to left out the interest rate that comes with it. I just spoke to a lender and he said the interest rate is usually 5% for 30 years. 5% x 30 years doesn't seem all that great considering interest rate for a conventional loan is at an all time high around 3%.

I am hoping if anyone could shed some light to my confusion as to why cash-out refinance is so great. David Greene and BP podcast seem to overhype it and make it seems like it's free money. Or am i completely off? Please advise. 

[Brad Hammond]

Hi @Vinh Nguyen, while I agree with you that the interest rates on a cash-out refi are higher than a traditional mortgage, they are still much lower than hard or private money loans.  I think the reason why David & BP are such big fans of it is not because of the interest rate, but by using it as a tool to leverage up to get your next property.  It is the method to tap into your equity without selling that is the powerful part.