Looking for some advice on a 5/20 rehab loan

[Jason Hoover]

Hey everyone, I'm just getting started on this new journey and I've identified what seems to be a nice first investment property. I've been using (and loving!) the rental tool here on BP to analyze different properties. If all things work out, I would buy, rehab, and rent it out. My question is, do any of you have guidance with using a 5/20 loan? I've never heard of this option. 

From what I understand, I finance for 5 years with payments amortized over 20 years with 10% down. At the end of 5 years, I must pay the balance or refinance. Can you share with me some of your thoughts and experiences using this method? 

[Lance Wakefield]

As far as portfolio investor friendly banks go this is basically the only option you have. This is why there is lots of talk of maxing out as many 30 year loans as one can before going another route like this. If it is a true deal the numbers should work with the 20 year though and you can still cash flow. It is a very normal thing for investors, nothing to worry about or shy away from.