Should I buy with a 30 year fixed or with a 5-year interest only?

2 Replies

What makes the most sense financially? I’m looking at a four-plex and the rates I’m being offered are:

Option A: 30 year fixed at 4.875%

Option B: 5 year ARM interest only at 5.125%

With Option A I won’t get any cash flow but I’ll be accumulating equity in the property. With Option B I will get about $4k a month. The down payment I’m putting into this property is $800k. My plan is to keep this investment property forever or for at least 10 years. What makes the most sense financially?

A four plex that won't cash flow with a 30 year loan would appear to be overpriced. I realize the Cali market is sorta its own thing but are you sure this is a good deal?