CalculateRealEstateROI

Financing

When does an interest-only loan make sense?

Short-term cash-flow optimization on appreciating value-add deals — never as a permanent strategy.

Reviewed by Keiron Brown, Founder & Editor, CalculateRealEstateROI · Educational estimates only — not investment, financial, tax, or legal advice

Direct answer

Short-term cash-flow optimization on appreciating value-add deals — never as a permanent strategy.

Expanded explanation

I/O temporarily inflates cash flow but creates principal-balloon risk and zero forced equity. Best used during 2–3 year value-add period before refinance.

Examples

  • 5-year I/O on a $1M multifamily during stabilization.

More Financing questions