LLC vs. Personal Ownership for a 5-10 Property Portfolio – Refinancing, Insurance

Phoenix, Arizona
General Real Estate Investing
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LLC vs. Personal Ownership for a 5-10 Property Portfolio – Refinancing, Insurance

Ying Tang
Member since 2025 · 324 posts · 122 votes

Hey everyone,

I’m trying to figure out the best way to hold a portfolio of 5–10 rental properties (not quite there yet, but that's the plan). I’m debating whether to keep them in my personal name or transfer them into an LLC. Here are the specific concerns I have:

1. Holding Structure:

How do you all hold your properties? Do you keep them personally or under an LLC? What factors influenced your decision?

2. Refinancing & Due on Sale Risk:

I’m considering refinancing my properties to get the benefits of an LLC (liability protection, easier transfers, etc.), but I’m worried about triggering the due on sale clause. Has anyone refinanced into an LLC? How likely is it to actually trigger due on sale issues in your experience?

3. DSCR Financing Trade-Offs:

If I refinance using a DSCR-based loan (which I understand often carries a higher rate), has anyone experienced significantly higher rates after moving properties into an LLC? How do you weigh that cost against the benefits of LLC ownership?

4. Insurance Costs:

The insurance premiums for my rental properties are already high (I received a quote of around $2,500 annually for a duplex valued at roughly $430k – almost double what the seller originally paid). If the properties are owned by an LLC, do insurers like State Farm still cover them, or do I need to look for a specific commercial landlord policy? Are premiums typically higher for LLC-owned properties?

I’d love to hear your personal experiences and any advice you have on structuring your portfolio for refinancing and insurance efficiency. Thanks in advance for your insights!

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Erik EstradaBusiness Member
Lender · Member since 2022 · 6k+ posts · 1k+ votes
1y
Quote from @Ying Tang:

Hey everyone,

I'm trying to figure out the best way to hold a portfolio of 5–10 rental properties (not quite there yet, but that's the plan). I'm debating whether to keep them in my personal name or transfer them into an LLC. Here are the specific concerns I have:

1. Holding Structure:

How do you all hold your properties? Do you keep them personally or under an LLC? What factors influenced your decision?

2. Refinancing & Due on Sale Risk:

I'm considering refinancing my properties to get the benefits of an LLC (liability protection, easier transfers, etc.), but I'm worried about triggering the due on sale clause. Has anyone refinanced into an LLC? How likely is it to actually trigger due on sale issues in your experience?

3. DSCR Financing Trade-Offs:

If I refinance using a DSCR-based loan (which I understand often carries a higher rate), has anyone experienced significantly higher rates after moving properties into an LLC? How do you weigh that cost against the benefits of LLC ownership?

4. Insurance Costs:

The insurance premiums for my rental properties are already high (I received a quote of around $2,500 annually for a duplex valued at roughly $430k – almost double what the seller originally paid). If the properties are owned by an LLC, do insurers like State Farm still cover them, or do I need to look for a specific commercial landlord policy? Are premiums typically higher for LLC-owned properties?

I’d love to hear your personal experiences and any advice you have on structuring your portfolio for refinancing and insurance efficiency. Thanks in advance for your insights!


 Hi Ying, 

Most conventional lenders will not allow you to close in an LLC. There are some instances (Mostly Portfolio Style Banks) where they can allow it. But it typically won't be on a Fannie/freddie Mac loan.

The DSCR loan is not too far off in rate compared to a conventional loan. The main drawback is the Prepayment Penalty Period on the loan. Some DSCR lenders have a no PPP option however the rate and/or the cost will be higher on these. Closing in an LLC is allowed on these loan types.

Most Insurance carriers should allow you to have the Insured Name as your LLC. In terms of a cost standpoint, the insurance is typically higher on a Rental (Do not quote me on this, just giving you information based on my dealings with insurance on the mortgage side). I am sure you should be able to work out a deal with your insurance agent on a policy covering multiple properties.

As for the benefits for closing in an LLC compared to personal name, I would suggest contacting a tax professional and attorney, to see what will suit your needs.

[email protected]818-269-7983
LuxePrivate Investments LLC 572 Reviews
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  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    1y
    Quote from @Ying Tang:

    Hey everyone,

    I'm trying to figure out the best way to hold a portfolio of 5–10 rental properties (not quite there yet, but that's the plan). I'm debating whether to keep them in my personal name or transfer them into an LLC. Here are the specific concerns I have:

    1. Holding Structure:

    How do you all hold your properties? Do you keep them personally or under an LLC? What factors influenced your decision?

    2. Refinancing & Due on Sale Risk:

    I'm considering refinancing my properties to get the benefits of an LLC (liability protection, easier transfers, etc.), but I'm worried about triggering the due on sale clause. Has anyone refinanced into an LLC? How likely is it to actually trigger due on sale issues in your experience?

    3. DSCR Financing Trade-Offs:

    If I refinance using a DSCR-based loan (which I understand often carries a higher rate), has anyone experienced significantly higher rates after moving properties into an LLC? How do you weigh that cost against the benefits of LLC ownership?

    4. Insurance Costs:

    The insurance premiums for my rental properties are already high (I received a quote of around $2,500 annually for a duplex valued at roughly $430k – almost double what the seller originally paid). If the properties are owned by an LLC, do insurers like State Farm still cover them, or do I need to look for a specific commercial landlord policy? Are premiums typically higher for LLC-owned properties?

    I’d love to hear your personal experiences and any advice you have on structuring your portfolio for refinancing and insurance efficiency. Thanks in advance for your insights!


     Hi Ying, 

    Most conventional lenders will not allow you to close in an LLC. There are some instances (Mostly Portfolio Style Banks) where they can allow it. But it typically won't be on a Fannie/freddie Mac loan.

    The DSCR loan is not too far off in rate compared to a conventional loan. The main drawback is the Prepayment Penalty Period on the loan. Some DSCR lenders have a no PPP option however the rate and/or the cost will be higher on these. Closing in an LLC is allowed on these loan types.

    Most Insurance carriers should allow you to have the Insured Name as your LLC. In terms of a cost standpoint, the insurance is typically higher on a Rental (Do not quote me on this, just giving you information based on my dealings with insurance on the mortgage side). I am sure you should be able to work out a deal with your insurance agent on a policy covering multiple properties.

    As for the benefits for closing in an LLC compared to personal name, I would suggest contacting a tax professional and attorney, to see what will suit your needs.

    [email protected]818-269-7983
    LuxePrivate Investments LLC 572 Reviews
    WebsiteView Page
    1Reply
  • Patrick Roberts
    Lender · Charleston, SC · Member since 2019 · 1k+ posts · 1k+ votes
    1y

    2. Fannie, Freddie and Govt loans cannot close with an LLC as the owner. There is a provision for Fannie loans that allows properties to be moved into an LLC after the loan closing so long as a few conditions are met. If you make any changes relative to title/ownership that are not allowed, then the lender will likely have the right to call the loan. Whether this happens is hit and miss; it seems like this almost never happened in the past, but anecdotally I feel like Im hearing about more of these.

    3. Very few lender have pricing adjustments for DSCR loans in LLCs vs held personally. In general, DSCR loans will price similarly to conventional loans at 75% LTV, good credit, and a 4-5 year PPP. When the PPP is 3 years or less, typically there are points on the front end to compensate.

    4. $2,500 in annual premium on a $430k rental is actually low in my markets - I would expect the annual premium to be over $3k in this scenario. While insurance is currently very differentiated by market/region, I expect the insurance trends we're seeing on the coast will be everywhere eventually due to inflation and other factors. Replacement costs are getting more expensive by the day. 

    0Reply
  • Patrick O'SullivanBusiness Member
    Property Manager · Phoenix, AZ · Member since 2024 · 559 posts · 213 votes
    1y

    Hey @Ying Tang, you’re asking all the right questions here—this is a topic that trips up a lot of investors as they scale. It’s great that you’re thinking through financing, insurance, and ownership structure all at once, since they’re so interconnected.

    For what it's worth, many investors start in their personal name and gradually move toward LLC ownership as the portfolio grows, especially when it comes to risk management, long-term estate planning, and potential partnership arrangements. That said, the financing side (especially refis and due-on-sale concerns) can definitely get tricky depending on loan type and lender flexibility.

    As for insurance, yes—premiums have gone up substantially across many markets, and policies for LLC-owned properties may require a commercial landlord or business-use rider. That doesn't always mean higher premiums, but it does vary by provider and market.

    Given how nuanced this stuff can get—and because the “right” answer often depends on your risk tolerance, goals, and how you plan to grow—I’d really recommend speaking with a real estate attorney who understands Arizona law. They can walk you through the trade-offs and help you structure things in a way that supports your long-term strategy.

    Looking forward to hearing how your portfolio grows—sounds like you’re laying a strong foundation!

    [email protected]480-795-7938
    get MULTIfamily Property Management4.7215 Reviews
    WebsiteView Page
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  • Vincent Zhu
    Gilbert, AZ · Member since 2024 · 21 posts · 5 votes
    1y
    Quote from @Ying Tang:

    Hey everyone,

    I'm trying to figure out the best way to hold a portfolio of 5–10 rental properties (not quite there yet, but that's the plan). I'm debating whether to keep them in my personal name or transfer them into an LLC. Here are the specific concerns I have:

    1. Holding Structure:

    How do you all hold your properties? Do you keep them personally or under an LLC? What factors influenced your decision?

    2. Refinancing & Due on Sale Risk:

    I'm considering refinancing my properties to get the benefits of an LLC (liability protection, easier transfers, etc.), but I'm worried about triggering the due on sale clause. Has anyone refinanced into an LLC? How likely is it to actually trigger due on sale issues in your experience?

    3. DSCR Financing Trade-Offs:

    If I refinance using a DSCR-based loan (which I understand often carries a higher rate), has anyone experienced significantly higher rates after moving properties into an LLC? How do you weigh that cost against the benefits of LLC ownership?

    4. Insurance Costs:

    The insurance premiums for my rental properties are already high (I received a quote of around $2,500 annually for a duplex valued at roughly $430k – almost double what the seller originally paid). If the properties are owned by an LLC, do insurers like State Farm still cover them, or do I need to look for a specific commercial landlord policy? Are premiums typically higher for LLC-owned properties?

    I’d love to hear your personal experiences and any advice you have on structuring your portfolio for refinancing and insurance efficiency. Thanks in advance for your insights!


    I had no issue to put one rental under an LLC and got insurance coverage from state farm. I also covered this rental under my personal umbrellas insurance as state farm allowed me to put less than 4 rentals into my personal umbrella policy.

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