Financing Inputs Tutorial
The Financing Assumptions Tab is where you select between a Cash Transaction and a Short-Term Rehab/Construction Loan. This tutorial will break down how to enter your short-term real estate financing scenarios, whether you're doing a rehab or new construction!
The idea is that while you're renovating and taking construction draws, you want to keep your cash outflows to a minimum. So an interest-only loan allows you to keep your payments down when the property is not bringing in any income.
The other reason why these are interest-only loans typically is because you will actually be adding to the loan as you take each “rehab draw” so it does not make sense to amortize a loan (pay it down) while at the same time increasing your principal loan balance.