Buying My First Multifamily Investment. Few Questions

[Jon Schoeller]

Hello everyone. I am looking to close on my first multifamily real estate deal this week. I have actually been in real estate for a while but mostly just flipping. (Over 130 to date) My partners and I picked this property up at auction about a month ago and I decided to buy it as my first personal rental. It a 4 unit that is fully rented. Purchase price of 100k. The rental income is 2200. ARV 150k. I will be buying it for cash upfront with the hopes to refinance it as soon as possible.

1. Should I buy it in my personal name or my LLC? So far I have decided to buy in my personal name as I have read that is the easiest way to get my refinance with the best terms.

2. I have also read that with having just one property, that insurance is more important than the LLC. As 9 times out of 10 that is what they go after in an event. Which type of insurance should I get and for how much coverage?

3. I have decided to manage the property myself at first just to gain the experience. I am not sure how long or short-lived this will be. The building can easily pay for management on its own so I can go that route at any time. Should I even bother? 

Any other advice would be greatly appreciated. Thank you for your time. 

[Bryan Noth]

Hey @Jon Schoeller.  Those first 2 questions are lawyer questions.  And for disclosure, I am not an attorney, please do consult yours before acting on anyone's advice. 

It is generally easier to purchase in your personal name, then transfer to a LLC or series LLC depending on set up. As I understand and have been told, it does violate the due on sale clause, but cases where the lender acts on that are exceedingly rare. Also much harder to secure loans or refi through an LLC to my understanding. I second what you mentioned on insurance, umbrella insurance is far more important than LLC for protection. Coverage is another lawyer question, but I would think $1 or 2 million should be safe. Might depend how many properties it covers?

Lastly question 3, for the property management side, I started by self managing for my properties in Austin and San Antonio, TX.  Do it yourself, learn the game and all that.  Aside from respecting the value of property management, it was not worth it.  I cannot do the labor or tasks better, faster, or cheaper than what my property manager can.  If you are getting started and need to earn the income by working as your own manager I am all for it.  Of if you have fantastic systems in place then more power to you.  Otherwise property management is the second best money I spend every month after coffee.  Free up your time to do what you excel at, enjoy doing, and maximizes return.