5/1 ARM or Fixed Rate??

[Stephanie Franckewitz]

Hi! I am a first-time investor and have to decide whether to go with a 4.5% 30 yr fixed rate with 25% down on a multi-family or go with a 5/1 ARM 4.25% 25 yr amortization schedule with 20% down. I plan on holding the property very long term. So definitely I will have to refinance the ARM if I go that route. Once I add in the likely cost of refinancing, the cash on cash return equals out. The benefit of going with the 30 yr is that I keep my great rate, but it is more cash out of pocket - but payments are lower. The benefit with the ARM is less cash out of pocket, but I will have to refinance and the payment is higher because of the lower down payment and shorter amortization schedule. Not sure what to do...Any feedback?