Cash-out DSCR refinance is the primary capital-recycling tool for portfolio investors. Extract equity from stabilized properties, redeploy into new acquisitions.
Typical structure
Cash-out caps at 75% LTV. Property must be seasoned (typically 6-12 months ownership). DSCR must clear lender minimum at new debt service.
When it makes sense
After appreciation has increased equity. After BRRRR has stabilized a renovated property. To consolidate higher-rate hard money into long-term DSCR. To refinance ARM into fixed-rate.
Common pitfalls
Property tax reassessment after refi can drop DSCR below threshold. Insurance premium increases. Rate environment changes between purchase and refi.
DSCR Cash-Out Refinance Strategy FAQ
6-12 months ownership before cash-out refi. Some lenders allow earlier with rate adjustments.
Standard cash-out caps at 75%. Some lenders extend to 80% for experienced borrowers with strong DSCR.
No — cash-out refi proceeds are loan proceeds, not taxable income.