First Rental Property Purchase: 5/1 ARM or FRM

[Tyler Sicard]

I have been offered an opportunity to buy one of 12 newly constructed condominiums. The condos are in the center of town and directly across the street from the local university (great school with 15k+ students). The new development also includes 5-6 restaurants, retail stores, and a hotel.

Purchase Price: $209,000, 2 bed 2 bath

All additional expenses (HOA, insurance, taxes, etc.): Approximately $500/month

I am confident I could rent this for no less than $1600/month based on local real estate.

I am 24 years old and this will be my first jump into the real estate world. I do not plan on living in it long term (maybe not ever). I am hoping this will be my first rental property. I have been analyzing this deal for some time now but I need a set of experienced eyes to give unthought of advice. After consulting with a regional bank they have given me three different options.

Option 1: 5/1 ARM, 25 year amortization, 10% down, 4.5%

Option 2: 5/1 ARM, 25 year amortization, 20% down, 4.25%

Option 3:   30-year fixed rate, 20% down, 4.875%