Seeking knowledge, advice and seeking fellow investors in my area

[Israel Irizarry]

Hello Investors, 

I am closing on a house on the 19th of this month and I got a few questions for those who are more knowledgeable then I. The house is a half duplex newly renovated interior nice backyard with a porch, drive way, and unfinished basement which I see as potential value or forced appreciation when we decide to finish it. We are buying it at 265k which the seller, who we know could sell it for at least 300k in my area. We are gonna use this property as our primary residence. 

My plan is to get this property, refinance to lower mortgage and lower rate. I hear the rates will be going down this February. Pull the equity out of the house, finish the basement for forced appreciation for the long term, and get another property (multi family) all within this next year. Its a lot but I feel like it is very possible with the right knowledge and team to work with. Any and all knowledge will be much appreciated and help me greatly. 

Also, if there are any investors in the Connecticut area I would love to get in contact,  pick your brain and potentially get some partnership going with future investments. I would like to start networking more. 

My questions are:

How soon can you pull equity out of you home and how?

How soon can you refinance?

Did I make a smart play or jump the gun?

How often can you refinance throughout the life of your loan? 

[Nathan K.]

Siding with @Nathan Grabau here on what he said, but adding some additional insights. I actually didn't know you can refinance in as little as 121 days. I figured it was closer to 180, so thanks for that, @Nathan Grabau! Sounds like it depends on your lender.

1) How soon can you pull equity out of you home and how? - depends on  how much you have in the house. If you buy it in cash, you can immediately refinance into a loan and pull 80% of your cash back out (so 80% of your $300k home value is $240,000). So that's a long way of saying you can pull 80% of your equity back (based on bank's appraisal of the value of your home). So, specifically with your numbers provided - you have it for $265k and it can sell for $300k. So you "own" 12% of the house (i.e. you have 12% equity - so 88% of the house is still financed). Say you pay off the loan to $250k and home value remains $300k - now you own 17% and are borrowing 83% - you with me so far? So now you have a $250k loan but the home value is $310k. That means you now own 20% of the house and owe 80% of the loan. THAT is the 20% equity thing people keep talking about. You can borrow anything beyond that, does that make sense? 

How soon can you refinance? - see above

Did I make a smart play or jump the gun? I think you made an extremely smart play, but need to be more realistic on your timeline. Going back to the 20% equity and pulling money out in a refinance for your basement remodel - when do you think it's realistic you'll have that much equity to enable a complete basement remodel? Food for thought.

How often can you refinance throughout the life of your loan? - like the other dude with an awesome name said, as many times as you want, but depending on your lender it usually runs 2-3% of your loan price to refinance. So on a $265k loan, it'll run $6-8k to refinance each time. Make sure you ask your lender about "break even" when considering new rates/buying down rates. A break even is effectively the time it will take your new rate to be worthwhile compared to the amount you paid it down. So if your new rate takes 20 years to break even, probably not wise. But if it breaks even in 2 years, then it's saving you money in the long run.

Questions for you, if you don't mind me asking:

1) what financing are you using? and what rate did you lock?

2) Do you know your city's rules on basement remodels? Specifically permitting and laws for basement egress doors/windows

3) how much is the basement remodel you're considering? Recommend 2-3 quotes

Thoughts - if you make friends with the other half-duplex owner, then you can eventually get yourself a full duplex :) feel free to DM me if you need any further clarification. Great work, Israel! Your first house is always the hardest.