Selecting 20 or 25 yr Amortization- Seeking experienced advice

[Andy Krzanowsky]

We are looking to buy a package of 7 homes.  We are getting back some options on rates and terms.

We have been offered 3/1, 5/1, 7/1, and even 10/1 year options.  Max rate increase of 2%/yr and a cap of 6% max over the course of the loan.  The rate would adjust annually after the original term.  We were even offered 15/yr fixed but it wouldn't cash flow at that rate/term.  The loan will be kept in house by a local bank.  No prepayment penalty and no balloon.

Obviously the longer amortization term creates better cash flow but the benefit of the 20yr AM is we pay down principal faster.  This is beneficial when the rate changes (to an unknown amount) because the rate is on the remaining principal balance. 

Would love to hear some feedback from people who have been down this road. Currently we have just been in the traditional financing side of the house for SFH.