3 Year Fixed, 5 Year Fixed or Variable?

[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!