Variable or Fixed rate mortgage with my new deal?

[Robin Valadares]

Hello BP Community,

I'm probably raising a question that may have been discussed in previous threads. In any case I was hoping to get some advice with my new deal.

I have the following 4 scenarios regarding going with a variable rate mortgage or a fixed rate mortgage. I believe I have my option selected with respect to the cash flow it provides me but I wanted some opinions in case I am missing something.

I'm using my HELOC for the DP at the interest rate there is 3.2%.

Variable rate is 2.55% 5 year, monthly payments 30 year amor

Fixed rate is 3.09% 5 year, monthly payments 30 year amor

All the numbers are based on receiving a rent of $1550, I'm hoping to get %1700. Cash flow includes CAP EX, vacancy, property management, mtg and property taxes.

Scenario 1:

75% purchase price at Fixed Rate

25% DP through HELOC

Monthly Cash Flow: 56$

Yearly: 668$

Scenario 2:

75% purchase price at Variable Rate

25% DP through HELOC

Monthly Cash Flow: 112$

Yearly: 1345$

Scenario 3:

80% purchase price at Fixed Rate

20% DP through HELOC

Monthly Cash Flow: 34$

Yearly: 413$

Scenario 4:

80% purchase price at Variable Rate

20% DP through HELOC

Monthly Cash Flow: 95$

Yearly: 1135$

Obviously the numbers suggest that scenario 2 and 4 provide the best returns. The only difference is that that 5% is equivalent to 13.5K, so I'm wondering whether the extra 5% from my HELOC warrants the 13.5K. Am I right in saying that since the interest i'm paying with the variable rate is tax deductible, that it doesn't matter what the rate is. I am a buy and hold investor, not considering any appreciation in the property but strictly cash flow.

Please let me know your thoughts!