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Back-of-the-napkin commercial real estate underwriting, in seconds.
5 Second Model · back-of-the-napkin underwriting
Refinance and Cash-Out
What will the new loan pay off, and what comes back to you?
A cash-out refinance trades current cash flow for a lump sum and a larger obligation. This calculator sizes the new loan against all three lender tests, nets out the existing payoff, prepayment penalty and origination costs, and shows what actually lands in your account. The line to watch is the change in annual cash flow: if it goes deeply negative and the property has no rent growth ahead of it, you have converted a stable asset into a levered bet on the next appraisal.
Cash out after payoff and costs
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New proceeds against what has to come out of them
How big the new loan can be
| Value at today's cap rate | -- |
| Constrained by LTV | -- |
| Constrained by DSCR | -- |
| Constrained by debt yield | -- |
| New loan proceeds | -- |
Where the money goes
| Existing loan payoff | -- |
| Prepayment penalty | -- |
| Origination, legal, appraisal, title | -- |
| Cash to you | -- |
| Tax on the cash out | -- |
What you are left holding
| Old annual debt service | -- |
| New annual debt service | -- |
| Change in annual cash flow | -- |
| New DSCR | -- |
| New debt yield | -- |
| New LTV | -- |
| Return on the cash you pulled out | -- |
Common questions
- Is cash-out refinance money taxable?
- No. It is borrowed money, not income, which is exactly why it is untaxed and exactly why it deserves care. You still owe every dollar of it.
- What is a prepayment penalty on commercial debt?
- Agency and CMBS loans often carry yield maintenance or defeasance rather than a flat percentage, and the cost can dwarf a simple fee. Check the loan documents before assuming a refinance is even available.
- How much can I pull out?
- Whatever the smallest of the three tests allows, less the existing payoff and costs. This model shows each constraint separately so you can see which one is limiting you.