Transferring property to LLC

[Todd Best]

Hi Everyone, long time listener, first time caller. Apologies if this is in the wrong forum.

I purchased my first two properties in October of this year and things are going well so far. My goal is to purchase more properties in 2022 to add to my portfolio, so I have been looking into setting up an LLC to house my properties. My current two properties are in my name only, no LLC or anything like that, though I have a separate bank account that I use for most of the property expenses.

Now, before creating my LLC I reached out to my lender to see if there would be any issues transferring my existing properties into the LLC, if they would invoke the due on sale clause, etc. I was informed that if I were to quick claim the properties into the LLC they would require me to refinance the loans into a commercial product (20 years amortization, 5 year balloon) and that any other properties I purchase would also be required to be commercial loans as well. They are also requiring personal guarantees on all investment properties.

My questions are as follows:

1) Is this normal practice? I have heard from the Rookie podcast that there are many banks that will either let the property be transferred into the LLC without issue/refinance or will let (at least for the first several mortgages) the mortgages to be conventional 30 year residential loans, even though they are in the LLC. Should I be looking at other lenders for better terms (30 year fixed) on my future purchases?

2) If yes to the above, would it make sense to create a new LLC to house any new properties and keep these two separate (in my personal name) until it is time to refinance them? My worry is that having these two properties outside of the LLC might damage the LLC in case of any liability issues, though I would have a completely separate bank account and finances for the LLC so I believe they would be treated differently.

3) Are there any other considerations I might be missing here? My primary goals are to properly protect my investments from any future liabilities and to have the most beneficial loan terms I can have.

Thank you to all your time and help responding!