What is Cash Out Refinance?

Updated: Jul 4, 2020

If you're looking to max out your profits and pay out low taxes, cash out refinance is the way to go. Find out why today on the Passive Cash Flow Podcast.

The Passive Cash Flow Podcast is for beginner or experienced investors. Learn how you can diversify out of the stock market, own a part of an apartment building & start earning Passive Cash Flow! Peoples Capital Group has been helping passive investors build wealth in NJ real estate for 10 years. Visit to find out if you qualify to start earning passive income and pay less taxes via investing in real estate. IRA's and 401K's are accepted. -- #NJRealEstateInvesting #AaronFragnito #PassiveCashFlow #PCG


Aaron Fragnito: All right ladies and gentlemen, welcome back to the Passive Cash-Flow podcast. On this episode we are going to talk about what is the cash-out refinance and why do we focus, why is our strategy the cash-out refinance? All right. This is an interesting topic. This is a strategy that we use to avoid paying the taxman thousands and thousands of dollars. This is episode number nine and we're going to talk about the cash-out refinance.

By the way, guys, you want to come to one of our seminars or webinars or learn how to get invested in one of our upcoming apartment buildings here in New Jersey, go to and you can figure out if you qualify for one of our upcoming investments. We try to make real estate accessible to all passive investors. Let's jump into it here. What is the cash-out refinance?

Why do we focus on the cash-out refinance? Why is that our main strategy here at People's Capital Group? It is really a tax strategy at the end of the day. I read Rich Dad Poor Dad years ago, about 10 years ago, if you heard my story here, if you listen to the podcast, we go over that sometimes and it inspired me to get into real estate. I have a passion for it. I want to own large commercial real estate over time and build my portfolio up and really create passive cash flow myself as well.

I've been doing that for the last 10 years and we work with a lot investors to do that. Why do I do that? Why do I do the cash-out refinance? Why don't I keep selling houses as a realtor, I used to make $150,000 a year as a realtor. That was a great income. I worked very hard for it, but in three years into acting as a realtor I was making six figures, so why don't I keep doing that?

Well, the reason is when you make $150,000 as a realtor, you have to give about 50,000 of it to the government because you have income tax, you get nailed on taxes as a realtor. You also have to work all the time. You're working weekends, you're doing open houses, you're taking calls at nine o'clock at night, you're at the bottom of the totem pole and you're working for a lot of people often for free as a realtor. It's a tough gig.

Now is great when you get started in real estate, but it was a highly taxed income. Now, if you read Rich Dad, Poor Dad, you learn about the tax strategy here, the best ways to make income are often income on assets. Even better way to make income is equity, caching on equity on assets. In real estate, you don't have to sell an asset to cash-out the equity in it, the value in it.

Normally with a stock or something like that, or a bond, you do have to sell it or to cash-out the equity in it, the value in it. There are ways to borrow against it, but in a real estate, it's very simple to refinance and the rate that you're paying for the money you're borrowing is very low. It's a very good strategy to harvest equity you created in real estate and put that equity, turn into cash, you could put it in your pocket tax-free. We'll go over why that's tax-free.

We'd used to flip a