cash out at close

does anybody know how to get cash out at close on a purchase ? the only way I know is to refi after owning the property. I see all these guys on tv saying they got $20, 30, 40,000 when they bought the house at the closing. Whats going on ?

gotta have a good lender. one who will lend on market value (after repairs) as opposed to just the sales price. one who is familiar with you, what you are doing, and these types of deals.

Your local Wells Fargo ain’t it.

even the local banks that I do bus. with are telling me that they can only do the appraised value or the purchase price, which ever is less, no more

Just like mcwagner said, they have to understand real estate investing. You are talking to people that do retail lending, they don’t understand what you are trying to do. Your deal may, however, not qualify for that kind of financing and your banker can be right. Make sure you deal with real estate agents, loan brokers, banks, appraisers, lawyers, contractors, lawn people, insurance brokers, etc. that deal with real estate investors. There are differences between what we do and the rest of the world. The people we need to deal with are not found in the yellow pages, they are found by finding out who the other investors in your town are using. If you are a regular Joe who pays his taxes and goes to Sunday school with his kids, you probably have never met these people before although you may have bought and sold 10 houses in your lifetime.

you should consider going to your local real estate investment club, or the closest one to your city and get to know people. then you can get referrals. you most likely will not get this info on your first visit or right after meeting another investor, but in time you will.

the other way to do it is simply align yourself with a good mortgage broker that deals mainly with investors. they will know what lenders they can use for your situation.

yes, there are ways to get cash back at closing. it’s not easy, nor is it completely black and white but it can be done. however, it all starts with your contacts. u must first commit yourself to working in this field because it’s a lot of work and attention to detail, and always a learning. good luck to you


I have done this many times. It is not difficult. You need to buy at a BIG discount and have the bank loan based on the appraised value (using their appraiser). Normally, the bank will not loan more than 70% of the appraised value if you are getting cash back. The 30% equity is the security needed to do the deal. Obviously, you’ll have to buy below 70% of appraised value if you want cash back.

Also, you should work with a small local bank that keeps the loans in their portfolio. You need to work with a decision maker , i.e. the president, vice-president, or chief loan officer. Personal contacts are essential. REI is a people business! Get out there and meet some living, breathing human beings!


what Mike has said is correct, though it is not easy to find a lender that will do this. basically, as Mike states, your subject property needs to sustain the full amount of the loan and have that much in equity to take the cash out. some lenders will only let u do it for rehabs, and put the money in escrow and allow draws payable to the contractors. that is y i was saying to align yourself with folks that have done this in your area. someone I may use in TX may not be able to write loans in your state. the other way is, as ike says do your research and aske questions

thanks for the info. Most of the deals I am making are just at the 70% arv which makes a good deal but not enough to get cash at close so I will just have to sell one or two to buy five or six more.

Many educators take something simple and make it complicated, Great educators take something complicated and make it simple

It is actually really easy to get cash out at close. Legal I dont think so but done quite often.

Say you have a home your purchasing for $70k and it may have a market value of $75k but would appraise at $100k (many times there is a huge difference between appraisal and market value). As a buyer you would offer the seller $100k for the property with $30k back at closing for “property upgrades.”

The technical part is that banks typically wont loan over and above the sales price in order to get money back at closing (because in reality you are only giving the seller $70k and financing in an additional $30k, banks dont like this), so what you need to do is put the $30k back on an addendum to the purchase aggeement. An addendum is an extension of the purchase agreement but it can be a side aggreement between you and the seller. So when you get the deal done the bank only sees the purchase agreement between you and the seller stating that the property is being purchased for $100k. YOU DO NOT send them the addendum this is an extension of the agreement between just you and the seller.

So on closing day you would bring in your typical down payment say 10% on an investment property, with your $3,000 in closing costs. So you would go to close with $13,000 (10%down+closing costs), but you would leave with a check for $30,000. So you would net $17,000 at closing. If you have no money all you really need is a relative to loan you the $13,000 for a day, then you pay them back when you leave closing. The only instance where borrowing wont work is if you have to have seasoning on the money for down payment.

I Hope this helps

Eric Medemar

it is my understanding that this IS legal, u just need to find a lender that will allow u to buy the property like that, get the cash back at closing.
as i stated earlier, most will allow a “rehab fund” if the property appraisal supports the amount of the loan, but they will only put it in escrow and only allow draws to contractors, not cash back.

Anytime you are hiding something from the bank, you are flirting with, if not overtly committing mortgage fraud!

Why not just be honest and tell the bank what you want to do. Find a way to do it honestly.


A legal way

I would agree I would not advise doing it this way, all I am doing is telling a way that I have seen it done. I have seen people walk from close with checks as high as $55k, I wouldnt advise it, but it is a way.

A more legal way that I have recently done is bought 2 properties for $33k and $38k then put about $6k into them, so I was into them for a total of $77k then I pulled equity lines out on them at 80%ltv, This allowed me to get $128k at closing for a cash difference of $128k-$77k=$51k

I then took that $128k and bought 2 more properties for $30k and $26k I put $15k into repairs for a total of $71k then pulled another equity line at 80%ltv for $115k so on these my cash difference was $115k-$71k=$44k

When you combine everything within 3 months I turned a $77k investment into $128k+$44k=$172k

$77,000 turns into $172,000 in 3 months, the properties generate $3125/month in income, To cover the payments on $172,000 I need roughly $1720/mo for a monthly cashflow of $1405

I could in theory have taken the difference in what I payed and what they loaned which was $95,000 and bought myself about whatever I wanted and still cashflowed a decent amount each month. $71k+$77k=$148k (What I paid) $128k+$115k= $243,000 (What they loaned) $243,000-$148,000=$95,000

Moral of the story: Stop worrying about ways to cut your lifestyle and save money. Instead focus on ways to make money and you will be far, far ahead.

The story does continue because I didnt buy what I wanted, instead I bought more real estate, then some more, and I intend to keep buying until our market straightens out, then I will sell. The interesting part is that this is when most investors plan on buying again because right now the market is to slow for them???

Eric Medemar

I am looking at buying a single family residence in a extreme buyers market. the house appraised at 250k owner is asking 249,900. I will be making an offer of 219,500. I figure final purchase price should be between 220k and 225k. The house will be financed 100%. I would like to get the extra 25k for other property purchases / investments. I was wondering if after purchase, how long would i have to wait before i could pull any money out of the house for the aditional investments? or what would you suggest in this situation?
Any help from this forum would be appreciated.


The only problem is that you do not have a postive cash flow situation. It seems like that because you only included your mortgage payment as expenses. Unfortunately, you got some VERY bad advice when you did that.

Here are the real numbers on your properties:

Gross Income $3,125

Less Operating Expenses $1,562
Less Mortgage $1,617

Equals Cash Flow - 54

Althought not a terrible negative cash flow, it is negative. The good news is that you have the $95,000, which could by a couple of more properties. Since they would be paid off, you would have no mortgage expense and therefore about half of the gross rent would be positive cash flow. That positive cash flow would offset the negative from these transactions. However, you need to be careful that your average cash flow per property isn’t extremely low.

It could literally be a decade before inflation adjusted prices get back to their previous highs, so counting on appreciation to sell may not be a good idea. In fact, prices will likely be down over the next 15 months and then will only slowly begin to recover (based on historical models).

The entire point of my post is that you can get into trouble borrowing to a high LTV, because you do have to pay the money back with interest. I’m not saying that happened in this case, but in my opinion this is pretty close to the line.

Good Luck,


WE do it all the time. The one we are doing now we purchasing for 29k needs 5k in fix up which is almost done and will have a value between 70-80k we are doing a refi based on the value and getting a 90% loan on the property (70/20) So we will not only have a cash flowing property since its a 2 unit and will bring in 1300 per month but we walk away with about 15k in cash at closing after expenses maybe a bit more. We will see when the final numbers come out. Anyway its easy to do you just need to find the properties that you can do it with.


you are refinancing which is easier to get the cash out, the OP is talking about buying and getting cash at closing. that is the tough one to do and actually walk away with the cash.

last one I did was with a refi purchase and got cash out.

Getting cash out at close is not hard at all, I have been to closings where the buyer did a cash advance on his credit card for the down payment. I think it was a $65k home so he borrowed $6500 from his credit card company, in reality the actual purchase price on the home was $50k so he went to closing with $6500 in credit card money and left with roughly $15k, then when he got home he paid off his credit card (it was only a one day loan then), and he had $8500 left over. Thats a true no money down, then leave close with money deal!!!Legal probably not, but done all the time. As far as over leveraging himself, 5 months later he realized that land lording wasnt for him and so he sold and made another $5000, when you buy right, you can sell right.

Back to the post on my lack of cashflow, I dont know about your market place but in mine on an 40k purchase the AV would be set at $20k so with non homestead taxes set at 45mils my tax bill would be roughly $900 a year and insurance runs $45 a month, so if you ad up those two my operating income is roughly $120/building with 4 buildings the expenses would then be $480/mo, no where close to the $1562 you described as operating expenses, also keep in mind that when I refinance these homes, they are practically brand new, so I wont have to worry about any large expenses in the next 5-10years. So yes they do cashflow pretty good.

With that extra $95k I bought a 2 unit for $30k then sunk $10k into it, I also purchased another single family for $25k that I am still fixing, with the last $30k I bought another single family that I fixed up for another $10k. The 2 unit rents for $1100/mo with roughly $120/mo going for expenses, the $30k home that I fixed up brings in $675/mo. For a grand total of an additional $1765/mo plus another home that will rent for $675 a month when I finish

As far as marketability and over leveraging in a terrible market, when you buy right you can sell right, the 4 properties mentioned before, as well as the single family have already sold, We close nov 20, my net profit wont be huge but i’m not going to scough at $110,000 net profit on some investment not even 5 months old. The beautiful part is I didnt lift a finger on one of these properties, so in all reality I took $77k and turned it into $187,000 in under 5 months in one of the worst real estate markets in the nation, and the only work I did was sign some documents.

Eric Medemar

Thats sounds great! I invest in about the same type of situations in the area I invest in although my taxes are a bit higher because its in new york. (a very liberal state so high taxes and bad for business are a given) Anyway we do pretty well buying properties for 30k fixing renting and refiing, pulling cash and having a positive cash flow on top of that. Of course the proceed we sink into another property or 2 or 3 pull cash and make sure they are positive rentals after all expenses. We also started with NO money at all and are just building our business property by property. No money of our own. We actually started with a loan from

That awesome, I love the cheap properties in the “bad areas”, Im glad not many people in my market know that bad tenants are bad tenants whether there in the nice neigborhoods or the bad ones. Keep up the goodwork sounds like you guys are way ahead of the game, I hope to learn more from you.

Eric Medemar