LLC, is it worth it starting out?

[Michael Couto]

I've read tons and tons of posts regarding LLC's and I understand that everyone has their own opinions and everyone's situation is different. As it pertains to me, just starting out, I was looking at starting an LLC for a few reasons but the further I dig into it, I'm not sure it's the right choice. I was hoping to get a few thoughts from more experienced investors to help me make a better educated decision.

Let me start out with the following:

-I own 1 duplex in my personal name and have a three family under contract that I plan on BRRRR'ing.

-I plan on getting an umbrella policy with the right amount of coverage for all my properties.

-I wanted to form an LLC because I felt it was best to start with the right structure from the get go as I plan on scaling. I want to make the right decision in terms of personal protection down the road once I have quite a few properties to protect my assets. I planned on 3-4 properties per LLC that I create. I also wanted to form an entity to help with some of my advertising strategy. The problem with this is all the banks automatically present commercial loan terms for smaller properties (4 units and less) when the mortgage is to be held by an LLC. The same goes for Land Trusts based on the information that I have gathered. A 4.75% Loan fixed for 30 years (personal) vs a 6+% loan for 10 years with 20 am makes a big difference.

With that being said, here are the options I see:

1) Do not start up an LLC at this time. Get the right umbrella policy and continue to buy smaller multi families in my name to take advantage of the better bank rates and terms. I do not own many other assets except the duplex I'm house hacking right now and hopefully this three family. Both will have quite a bit of equity. Down the road, if I feel it necessary, develop an LLC and do a quit claim deed into the LLC's name. Again the risk here is if the bank calls the loan and I have to pay off the mortgage...Can I refinance with another bank or switch the deed back into my name? Will this be a huge hassle?

**I understand anything over 4 units automatically forces me into obtaining commercial lending.

2) Create an LLC. Put both my properties (if everything pans out) in it along with the right umbrella policy. Pay the higher rates but have a higher level of protection (as far as I've been informed) as I scale. Put 3-4 properties per LLC and continue to repeat. This is the direction my attorney and CPA had suggested.

Sorry for the long 2nd post. Feel free to rip this post apart, I do appreciate and suggestions or feedback.

Thanks guys!