Need help understanding cash out refinance!
I am a new investor and I am having a hard time understand aspects of a cash out refinance. Right now I am looking at a quad that is worth $171,000 that I want to purchase. This property needs new flooring, new cabinets and appliances and a bit of work in the bathrooms. Lets assume the estimated cost for rehab is $50,000, including vacancy. Even though this is an extreme overestimate, I understand that work may go over budget. There are multiple properties on the same street that are also quads worth anywhere between $330k to $350k.
If I were to do a cash-out refi, and the property was appraised and refinanced for $330k, what would that mean for the mortgage on the home? If I already have $221k into the deal and the new value is $330k, can I now take out around $100k for another investments? Isn't the mortgage now greater? Won't that mean that the expenses now increases because there is a larger loan attached?
Wouldn't it be best to completely pay off the property with the new loan? How does pulling our money come into play? I am really trying to understand this concept.