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Updated almost 6 years ago on . Most recent reply

User Stats

7
Posts
1
Votes
Manuel Jesus
  • Rental Property Investor
  • Pacific Palisades, CA
1
Votes |
7
Posts

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

Manuel Jesus
  • Rental Property Investor
  • Pacific Palisades, CA
Posted

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?

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