Exit Strategies for conventional ARM mortgages

[Sam Tang]

I'm looking around for a portfolio lender that will finance me for a non-warrantable condo and finally found one. The condo is in the $175-200k range. They offer a 10/1 ARM with a 30 year loan term at 4.25% with 25% down. What are some exit strategies I can consider for the ARM in case interest rates rise to unfavorable levels in the next 10 years?

Now, my primary goal is to buy and hold this property because it is in a great location with possibility of rail service being added within the 10 years to it (which I speculate will help the property appreciate). I don't think I will have any problem with equity requirements in the future. The property is also near a university so I should not have a problem having it rented to that crowd for cashflow.

Since the condo is non-warrantable, it will be harder to sell to the normal buyer. I would rather not put the extra cash flow towards the principal balance. How easy would it be to refinance out the ARM to another type of financing if rates trend upwards?

Thanks!