Along with this, I borrower part of my equity funds from him in a laddered I/O note paying from 6-8% quarterly.

Depending on income and loan type, likely mid 7%'s..we've been utilizing some more creative durations as well, 30 & 40 year I/O.

A PITI term also helps a bit better than a I/O loan.When it comes to the original loan itself, investors should avoid deviating too far from the standard 1.2 to 1.3 DCR.

80% LTV with local bank, 5 year term, 2 years IO, 25 year AM How did you add value to the deal?

If, however, you choose to calculate it to reflect IO payments that's fine too.I believe with deals, you can do pretty much anything you choose (as long as it's legal, honest and not fraudulent) you just have to disclose how you are calculating it.

They also offer longer I/O options like a 30 year with the first 10 years fixed interest only.

If you don't want to sell, then your choice is to bring more to closing or take the 10 year I/O payment.

With rates where they are currently it is definitely more difficult to find deals that will cashflow, but talk to your lender and see if they offer I/O payments this will definitely help with cashflow and then in a few years if rates come down refi into a P/I loan product.

I am looking at a hard money I/O loan to finance this deal.

The only caveat will be that you will have to factor the HEL or HELOC payment into your debt to income ratios (DTI)  so make sure you do the calculation or your lender helps walk you through that calculation so that there are no issues on the upleg purchase transaction.You can take a longer term on your HEL to stretch out that principal and interest payment or use a HELOC to lessen the DTI load since HELOC's typically are interest only(IO).