CalculateRealEstateROI

Financing

Should I use an interest-only loan?

Only on short-term value-add deals where higher early cash flow funds the business plan.

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

Direct answer

Only on short-term value-add deals where higher early cash flow funds the business plan.

Expanded explanation

IO maximizes year 1–3 cash flow during stabilization. Avoid IO on long-term holds — you'll have a balloon and zero amortization-driven equity build.

Examples

  • 3-year IO bridge then 27-year amort on value-add small MF.

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