Newbie refinancing plan

[Trevor J Dammon]

Hi all,

Newbie here. Creating a written plan with some spreadsheets. The basic plan is to buy a duplex with 20% down (100k down for a 500k property). Annual cash flow around $2,500. After the property has appreciated and I've paid enough of my loan down I will refinance and cash out enough money for a 20% down payment on another property. Seems like it takes about 7 years for this with a 5.5% interest 30 year mortgage.

I'm not sure if this is even a good strategy but I am just learning.

Is it fair to assume 2% appreciation?  I know that is the average but over 7 years its much harder to predict. Is there a better way to estimate when I can refinance?

[Brandon Rush]

Hey Trevor, 

While you can guess what appreciation will look like in a few years, nothing is guaranteed. Your plan does make sense if everything continues to appreciate for 7 years at 2%, but you never know. One way to ensure appreciation is to force it, instead of waiting on it. Buy something that needs work and is under market value. Get it fixed up and boom, you have forced appreciation and equity immediately instead of waiting 7 years. If you have not already, I would recommend reading the Millionaire Real Estate Investor by Gary Keller. Phenomenal book all new investors MUST read!

Good luck on your journey!