Refi pros and cons: How long should I wait?

[Luke Bauer]

I am coming to the end of my first brrrr deal on a duplex in Athens, GA. Both sides have been rented now for a couple months and are cash flowing nicely.  Currently the loan for the property is sitting with a private lender and I am paying 10% interest-only with a balloon at 2 years. The note was set up so that I have the option to refi and pay back the loan prior to the 2 year balloon, however the lender must receive at least 1 years worth of accrued interest. Basically the lender needs to make at least 10% on his investment when all is said and done. 

I have spoken with a loan officer who can lock me into a 30 year fixed at 5.75%. However, with the amount of equity I built in on the rehab, I will only be able to pull out the purchase price of the home and the associated closing costs. This means that the remainder of the interest I owe my investor would have to come out of my pocket.   

My question is, should I refi now after only a few months or should I wait until the end of the first year when the 10% has been paid in monthly installments? The pros for the early refi are locking in the rate while rates are low and property value is high. It also frees up my investor's capital so that I can look at doing more deals using his money. The con is that I am essentially paying double interest for the remainder of the first year. The 10% to my investor is guaranteed and after the refi, I would be paying 5.75% to the bank.