Understanding Refinancing once and for all!!!

[Yoni R.]

I need to some helping understanding the refinance game once and for all. These are the details of the property I want to buy: -Asking price $130,000 -Zoned single family (but was used as a duplex in the past) -An additional $60k is needed to rehab the house. I want to buy the house in cash and rehab it and then refinance it to get whatever I can out of it to be used on the next deal. My game plan is to rehab it as a single family (so that it will pass the inspection) but to have it setup so that it can easily be made into a duplex when ready (put up a wall and add an additional kitchen back to back with the current kitchen). I want to rent out the house as a single family for the first year and in that time refinance it and get my money out. Once the year is up I will turn it into a duplex and rent out the units. Each unit for $1,300. So cash on cash: Yearly rent $31,200/cost $190,000 = %16.4 return. The questions are as follows: 1. What does a refinance entail? 2. How long does the process take? 3. Will they do an inspection to check that it matches the permitted plans? 4. Who inspects the house? The lender/bank or the city? 5. If they do inspect then why? For what reason? 6. Is it a one time scheduled inspection or do they send multiple inspectors for different things? 7. Is the refinance for the appraised value of the rehabbed house or only for the cash I put in or bough it for? 8. What is the average refinance rate? %70, %75, %80? And what do they base it on? Anything else I need to know about refinancing and inspections before going forward with this deal? How does my game plan sound? Thanks for all the help!

[Stephanie P.]

@Yoni R.

The inspection by the lender is done for value, not to make sure the permitted work is satisfied.  In order to have the permits signed off, you'd have to go through the county.  Hope I didn't mislead you.

You'd have to make sure the property is properly zoned for a duplex before you just turn it into a duplex.  Once the plans are approved and the work is complete you can get a loan.