An adjustable-rate mortgage (ARM) starts with a fixed interest rate for an introductory period, then resets on a schedule for the rest of the loan. The name usually encodes the structure: a "5/6 ARM" is fixed for five years and then adjusts every six months. After the fixed period, the new rate is calculated from a published market index plus a fixed margin set in your loan documents, usually subject to caps that limit how much the rate can move at each adjustment and over the life of the loan.
The trade is straightforward: the introductory rate is often lower than a comparable fixed-rate loan, in exchange for uncertainty later. ARMs can make sense when you expect to sell or refinance before the first reset, and they can hurt when rates rise and you are still holding. For a rental, the question is whether the property's cash flow survives the worst-case rate your caps allow — not whether the teaser rate looks good today.