Tap water is fine for extraction yes.
As for the other question, dmt freebase is not really soluble in water, check this out:
https://wiki.dmt-nexus.m..._Properties#Freebase_DMTDMT will only dissolve in acidified water, but then you would have to re-add base and extract again. Check the FAQ for recrystallization and washing, those are the two ways that are used for cleaning up dmt.
Do NOT eyeball your dosage if you are going to consume dmt orally! An overdose of smoked dmt will probably just make you black out and be back 10 mins later. An overdose of oral dosage might take you into a serious hell for hours and hours, you can panick, do stupid things, etc.
You dont need a mg scale but do get a 10mg scale (0.01g) or in the very least a 0.1g scale and then measure, say, 0.3g and divide that into 6 doses for vaporizing, and maybe 8 or 10 doses for oral (at least first time before you know your individual sensitivity).