Can You Get Cash Out When Refinancing a Multifamily Property?

A cash-out refinance can allow a multifamily property owner to access part of the equity built in an apartment property without selling the asset. This strategy can become relevant after renovations, rent increases, or occupancy improvements have increased the property's NOI and appraised value. Investors considering a multifamily refinance loan can evaluate whether the property's current performance supports a cash-out transaction.

The basic process involves replacing the existing mortgage with a new loan based on the property's current financial position. The new financing first pays off the existing debt. If the qualifying loan amount is higher than the current balance and the transaction meets the applicable requirements, the remaining proceeds can provide cash to the investor. The amount available depends on factors including NOI, DSCR, occupancy, appraised value, and existing debt.

Multifamily mortgage lenders typically look at the property's current performance rather than simply relying on the original purchase price. This is particularly relevant for value-add investors. An apartment building may have been acquired with below-market rents or underperforming occupancy, then improved through renovations and repositioning. If those improvements increase NOI and property value, the investor may have created additional equity that can potentially be accessed through refinancing.

Cash-out refinancing can be used to redeploy capital into another investment rather than selling the current property. However, investors should consider the effect of increasing the property's debt. The new loan must still be supported by the property's operating income, and the resulting DSCR needs to remain within the applicable qualification range. A larger loan may provide more capital at closing but also creates a higher debt obligation.

Before pursuing a cash-out multifamily refinance loan, investors should establish the property's current NOI, occupancy, estimated value, and existing loan balance. An appraisal can help determine the asset's current market value, while updated operating statements can demonstrate its income performance. Comparing these figures can help determine whether sufficient equity exists for a cash-out transaction and whether accessing that equity supports the investor's broader portfolio strategy.