Many Charleston investors buy an older house, renovate it, lease it and then refinance it into long-term debt, pulling out much of the cash they put in. The refinance is a DSCR loan, sized on the property’s new value and its rent.
How much you can take out
A DSCR cash-out refinance can go up to 80% of the appraised value. The new loan pays off the fix and flip loan, and anything above that comes back to you, less closing costs.
Example
| Purchase price | $360,000 |
| Renovation | $110,000 |
| Total cost | $470,000 |
| Appraised value after renovation | $620,000 |
| 80% cash-out refinance | $496,000 |
| Paid off: fix and flip loan | $434,000 |
| Cash back before closing costs | $62,000 |
The rent has to carry the new loan
The larger loan has to pass the ratio. With South Carolina’s 6% assessment on rentals, flood insurance where required and higher payments on a larger loan, check the DSCR before you assume the full 80%.
Timing
- Have the lease signed before you apply, so the rent is documented.
- The appraisal will compare the house to renovated sales nearby. Keep before and after photos and the list of work.
- Rental loans take about 30 days, appraisal included.
See DSCR rental loans for terms, or send us the numbers on your property.