Fixed versus Variable pros and cons

[Michael Klinger]

I posted a similar over the weekend with little response. Here I will be more specific:

I'm closing on 3 separate multi-s at the same time in the same area. Nothing crazy, or over extended, Pretty conservative leverage actually with down/equity coming from a 1031 exchange. These three properties will represent most of my commercial portfolio.

I have three banks heading toward a soft yes on everything. The most enthusiastic and responsive is regional bank offering a blanket, or three separate loans depending on my preference. and we've boiled it down to 2 options. a 5 Year ARM that resets every 5 years, or a 25 year fixed. There is a 1 percent spread between the opening rate of the 5 year and the 25 year fixed.

I believe interest rates heading up.  And then up some more.

If this was a loan on my home, I'd pick the fixed. I'm leaning strongly towards the fixed, even though it will add short term costs, for the long terms security of it.

However, I also realize that it is very unlikely that I will make it that many years without wanting to re-fi to cash out and do other deals, even at the expense of potentially higher potential future interest and/or short term pre-pay penalties.

Thoughts from experience?