Refi into LLC or Personal Name w/Umbrella Policy?

[Michael Doherty]

Hi all, stay with me on this one.....

I am half way done with renovations on my first duplex BRRRR. I purchased it with hard money in an LLC. I currently own two other duplex's, one in my personal name which I house hacked and another in an LLC which I got a 20yr commercial mortgage on. I have a well paying W2 job but do not plan to be here much longer (going to go full time into REI).

I keep going back and forth with lenders, accountants, lawyers about what the best way to structure this deal is. I got lunch with a successful investor yesterday who is also a commercial lender and said to just put it in my name and get a great insurance policy while I still have my good W2 job. My lawyer said to form an LLC and have it separate from all other assets. My account said to group it in the same LLC as the 2nd property (which is the same LLC I used for the hard money loan)

Rates and Terms: Most traditional banks want to see 6 months seasoning. The holding costs are roughly 1200 a month- interest only for the hard money loan. 12 month loan no prepayment penalty. 

Option 1: Refi into separate LLC with a commercial broker- No seasoning, 5/5ARM 20 year Amortization, 1pt, 5.75%

Option 2: Refi into personal name: 30 yr fixed 4.5% no points

Cashflow isn't that much more on the traditional 30 yr note and it's only 100bp difference in rates. My goal is long term buy and hold. From a liability and debt to income standpoint however, what makes more sense? Get as many loans in my personal name while I still have the income. Or go commercial route and protect the asset in an LLC.

Thank you!