Cash-Out Refi Strategy for a Fourplex

Lender · Chicago, IL · Member since 2025 · 203 posts · 101 votes

9mo

Personally and professionally, I feel a cash out refinance wouldn’t be in your best interest right now. With around 14 percent equity, most lenders are not going to approve a cash out refinance on a fourplex. The majority want to see 25% to 30% equity after the refinance, even if the property is fully renovated and has a positive cash flow. There may be a few local or portfolio lenders that are more flexible, but the amount of cash you could pull out would small and would more than likely hurt you in the end, due to the higher payment. - Since rates haven’t dropped much, refinancing now doesn’t give you a big advantage. You’d likely pay closing costs, reset your loan term, and still walk away with little usable cash, which is a valid concern.

A lot of investors in this situation usually wait. Let the property season for another year or two, continue collecting strong rents, and allow equity to build through appreciation and principal paydown. That usually makes a future cash out much more worthwhile.

If you want to explore options now, some investors look into local banks, portfolio loans, or possibly a second loan or HELOC on the property, but those options are more limited and market specific.The best move is letting the mortgage mature and build a little more equity before attempting to pull money out and refinance too early.

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Patrick Roberts

Lender · Charleston, SC · Member since 2019 · 1k+ posts · 1k+ votes

9mo

80% LTV is the absolute max for a cashout refi for any kind of institutional loan, and the vast majority of lenders wont go over 75% LTV.

When you say current equity is 14%, do you mean that the current lien payoff is 86% of the FMV, or the current lien plus the $120k you invested is 86% of the FMV?

Lastly, there is no such thing as an amortization clock. The interest rate, loan balance, and amount paid determine the split between interest and principal each month, not an amortization schedule.

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Erik EstradaBusiness Member

Lender · Member since 2022 · 6k+ posts · 1k+ votes

9mo

Quote from @Rob Tara:

Hello BP community.

I’m looking for advice from investors with more experience on whether a cash-out refinance makes sense in my situation.

Property Details

Type: Fourplex
Purchased: May 2024
Current Loan Rate: 6.65% (3/1 ARM)
Current Equity: ~14%
Capital Improvements: Invested $120,000 renovating all four units + exterior
Status: Rents are fully stabilized and the asset is now cash-flow positive

Objective:

I want to acquire another investment property, but I’m short on cash for the down payment and closing costs. My plan is to refinance and tap into the equity I’ve created.

Key Questions for the Community

Is a cash-out refi even feasible with only ~14% equity?
Most lenders I’ve spoken to seem to require at least 25–30% equity (post-refi) on small multifamily. Curious if anyone has pulled off a cash-out at a similar equity position.
Given that rates have only gone down marginally, is there any strategic advantage in refinancing now?
My fear is: I refinance, get a slightly better rate, but barely extract cash—and I restart the amortization clock.
Is there a smarter way to unlock capital?

Appreciate any insight from investors who have negotiated similar situations

I don't think it makes any sense for you to refi. You might want to revisit once you hit 2.5 years on your loan since it is an adjustable.

If you really find a good deal, it may make more sense to use JV Partners or save more money to put towards a DP. Your closing costs alone are going to eat your refi proceeds. Your rate might be lowered less than half a percent, but you are way better off sitting tight and riding the wave for now.

You are in a good spot.

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Juan Yepes

Lender · Miami, FL · Member since 2025 · 121 posts · 33 votes

9mo

@Rob Tara you'll need to find an unconventional loan product that would allow you to tap into your equity considering you are above 80% LTV. This is typically where banks won't be interested but mortgage brokers can find non-institutional lenders that take more risks than the banks are willing to. Feel free to reach out if you'd like to explore further.

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Cash-Out Refi Strategy for a Fourplex

Cash-Out Refi Strategy for a Fourplex

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