Refi Question: Rental Cashflow + Moving Loan into LLC

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Refi Question: Rental Cashflow + Moving Loan into LLC

Daniel M.
Investor · Brooklyn, NY · Member since 2024 · 66 posts · 38 votes

I have a rental property that's owned by an LLC (it was quitclaimed from my personal name). The existing mortgage is still in my personal name, which I'm not thrilled about in the long term. I'm considering refinancing the loan into a DSCR in the LLC's name to clean up the structure and improve cash flow.

Current loan:

Interest rate: ~7.4%

Loan balance: ~$260k

All-in PITI: ~$2,250

30-year fixed, recently originated

Refi (DSCR):

Rate: 6.5 (can go to 6.375 at one-time cost of $388)

New loan balance: ~$277k (fees and costs rolled in)

All-in PITI: ~$2,150

Monthly cashflow improvement: ~$100

No PMI

So on day one, the refi improves cash flow by about $1,200 per year. The tradeoff is that rolling in fees increases the loan balance by roughly $15k, and the simple break-even is around 12 years.

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  • Derek BrickleyBusiness Member
    Lender · Ann Arbor, MI · Member since 2021 · 665 posts · 226 votes
    8mo

    Hey Daniel!

    I'm not a CPA but for our properties our cpa runs our expenses through the business allowing us to exclude the mortgages even though they're in our personal name.  So that might be worth a conversation with your CPA.  I don't think that breakeven is worth it personally, but how much is the property worth estimated? 

    [email protected]734-645-7722
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  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    8mo
    Quote from @Daniel M.:

    I have a rental property that's owned by an LLC (it was quitclaimed from my personal name). The existing mortgage is still in my personal name, which I'm not thrilled about in the long term. I'm considering refinancing the loan into a DSCR in the LLC's name to clean up the structure and improve cash flow.

    Current loan:

    Interest rate: ~7.4%

    Loan balance: ~$260k

    All-in PITI: ~$2,250

    30-year fixed, recently originated

    Refi (DSCR):

    Rate: 6.5 (can go to 6.375 at one-time cost of $388)

    New loan balance: ~$277k (fees and costs rolled in)

    All-in PITI: ~$2,150

    Monthly cashflow improvement: ~$100

    No PMI

    So on day one, the refi improves cash flow by about $1,200 per year. The tradeoff is that rolling in fees increases the loan balance by roughly $15k, and the simple break-even is around 12 years.


    On a DSCR Loan, title can be held in an LLC however you still personal guarantee on the loan. They will require a personal credit report to qualify.

    Some lenders do not report the mortgage on credit, however you are still required to disclose the debt on a conventional mortgage since you sign a PG at closing. 

    These numbers do not make any sense to spend $15k on a refinance. You are better off waiting and shopping your insurance/seeing if you can reduce your property tax rate to save $100 bucks a month. You could even see if you can cut some of your personal expenses to save $100 a month. 

    I don't think it's worth it. 

    [email protected]818-269-7983
    LuxePrivate Investments LLC 572 Reviews
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  • Patrick Roberts
    Lender · Charleston, SC · Member since 2019 · 1k+ posts · 1k+ votes
    8mo

    Why is the balance increasing $17k on this loan? You should be at or under $10k on costs. Is there some kind of fee or something else that's being including in the balance increase from $260k to $277k?

    0Reply
  • Stacy RaskinBusiness Member
    Lender · Member since 2022 · 1k+ posts · 503 votes
    8mo

    Refinancing is a good idea if it increases cashflow in a meaningful way. The costs shouldn't be $15K for this loan. Also, might be helpful to see if insurance costs can be reduced and still get the same coverage. I've seen insurance coverage costs vary widely for the same property. Happy to connect to discuss further. 

    [email protected]818-770-0340
    Bright Skyline518 Reviews
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  • Frankie VozziBusiness Member
    Member since 2025 · 336 posts · 82 votes
    8mo

    Daniel, Even though the breakeven on rolled-in costs looks long on paper, DSCR loans aren't just about rate arbitrage , they're about structure, flexibility, and scalability. If the property cash flows, moving it into an LLC DSCR often makes sense, especially if you plan to keep acquiring or refinance again when rates move.

    [email protected]516-888-7750
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  • Sandy Hu
    Rental Property Investor · CA|AZ|MI · Member since 2018 · 59 posts · 22 votes
    8mo
    Quote from @Daniel M.:

    I have a rental property that's owned by an LLC (it was quitclaimed from my personal name). The existing mortgage is still in my personal name, which I'm not thrilled about in the long term. I'm considering refinancing the loan into a DSCR in the LLC's name to clean up the structure and improve cash flow.

    Current loan:

    Interest rate: ~7.4%

    Loan balance: ~$260k

    All-in PITI: ~$2,250

    30-year fixed, recently originated

    Refi (DSCR):

    Rate: 6.5 (can go to 6.375 at one-time cost of $388)

    New loan balance: ~$277k (fees and costs rolled in)

    All-in PITI: ~$2,150

    Monthly cashflow improvement: ~$100

    No PMI

    So on day one, the refi improves cash flow by about $1,200 per year. The tradeoff is that rolling in fees increases the loan balance by roughly $15k, and the simple break-even is around 12 years.

    This is a really solid breakdown, and you’re thinking about it the right way by actually running the math instead of just chasing a lower rate.

    A few nuances to consider beyond the ~$100/mo cash flow bump:

    • Breakeven math – The simple 12-year breakeven is directionally correct, but if you factor in inflation + potential rent increases, the effective breakeven is usually shorter, especially if rents reset every 1–2 years.

    • LLC + liability cleanup – Moving the debt into the LLC isn't just cosmetic. For many investors, that structural cleanup alone is worth a small hit to loan balance, especially if you plan to scale or add partners later.

    • Future flexibility – DSCR loans often make it easier to do portfolio refis, cross-collateralization, or sell individual assets later without entangling personal credit.

    One thing I'd double-check: are the DSCR terms 5/30 or 30-year fixed, and is there a prepay penalty? That can materially change the real breakeven if rates move again.

    I work with a lot of investors who've done this exact transition (personal → LLC via DSCR), and in most cases the decision comes down to whether they plan to hold long-term vs. recycle capital in the next 5–7 years.

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