Deal Analysis: What would you advise?

[Jarrett Thornton]

I am purchasing two rental homes as a package and we are wrapping the note with the existing bank.

$80k Purchase Price.

10% down and the owner is holding the note on the other 10%.

Bank has agreed to refi in 90 days - 6 months with 15% - 20% down.

These are the options we will have, and I am curious to know which you would choose and why.

3 Year Fixed (4.75%-5%)

5 Year Fixed (5.25%-5.5%)

Variable: Prime 3.5(today) +1.75 = 5.25% floor

Rental Income after Taxes and Insurance: $1,178

I would love to hear your opinion on the deal itself.

Thanks!