BiggerPockets

Does anybody here use ARMs for buy and hold rentals (not flips) that they expect to hold for more than 3-4 years as income properties?

Is this too much tempting fate on the 50% rule?

If you are using ARMs, are you pre-paying your mortgage with some of your cash flow to reduce risk on the ARM reset date?

I'd love to hear any ARM strategies that people believe have neen successful, and how much risk they brought to the table for your deals.

I bought a property in 1988 with an ARM (at the time as an owner occupant) because it was the only mortgage I qualified for. 3 mos later I rented it out. The ARM adjusted every year and was tied to the Treasury Index. I have to say I had a tremendous fear of ARMS hearing all sorts of horror stories. It was only a $65K note but I have to honestly say in the last 20 years I also made the adjusted payments never going into negative amortization and my rents always covered the debt service, despite rate fluctuations from 1988 to present. Some years I simply broke even but many years I cash flowed nicely as now.