7/1 ARM vs 15 year fixed on duplex

[Jessica Frisk]

We have just entered into contact on an investment property duplex. We can get a 7/1 ARM at 5.35% with $12,000 in closing costs or 6% with $7,100 in closing costs. Alternatively, we can get a 15 year fixed at 5.25% with $8,800 closing costs. While none of these options allow for immediate cash flow on the property (we are on the northern CA coast) the ARMS would allow us to break even. The 15 year fixed would be about $1,000 out of pocket monthly.

We own other single family homes in the area and cash flow on those. We are concerned with where interest rates might go in the next 7 years. Any advice is welcome. Thank you.