Refinancing Cash Out Advice

[Derek Johnson]

Hello,

Hope everyone's New Year is off to a good start! I'm writing to seek advice and guidance on my next step in REI. Here's where I sit and what I'm planning next: I own two properties about 1/2 mile apart. The first was a 2br/1ba currently leased for 1 year at $900/mo. The second is a 3br/2ba (we added a bathroom downstairs), that was a foreclosure. We plan to buy another property and rent this one out next. Where you come in is telling me the best way to go about it and the next steps to take!

So, more info on our current property. We purchased it at $69,100 after a 4 way bidding war. We improved much of the house with sweat equity, and had a fair market value of $110,000 given to us by our realtor. So my plan is to cash out and refinance 80% of the new appraised value, which will hopefully be in that neighborhood. This would leave us roughly $20,000 to purchase another property, and we think we can rent the current for $1000/mo. 

A few questions. 

1.) Is this a reasonable plan?

2.) What type of fees should I plan for with refinancing?

3.) Is there any way to know how much a property might assess for before having it assessed?

4.) Are there penalties for taking cash out when you refinance?

5.) Once we have the money, would lenders be willing to give us a third mortgage after seeing the rental income on our tax return?

Thanks in advance!

Cheers,

Derek