Hello all! 

My wife and I are working on a deal for a 2-unit up/down rental building.  The upstairs is a 3-bedroom (very rare in our area) the bottom was recently a salon and needs updated to rent as a studio or 1-bed (no shower, no kitchen) however it's an open space that is a very cool "blank canvas".

My real question is about LLC vs. personal for our situation, not really looking to nit-pick the KPI's, but feel free to comment on those as well...

Based on 4 different lender scenarios available, the range for KPI's is below:

Assume price of 175,000

5-year ann.return 19-25 %

CoC ROI 14-21 %

Cash Flow 440-850 per month

Estimated investment to convert the lower unit:  $10,000 (but could be more if I cannot DIY as planned)

My wife is the agent so she'll get commission of about $3,500

Recent updates within last few years:  New furnace, new central a/c, new roof... without a formal inspection, I would consider the overall condition to be "good / very good" shape for being an old building.  the property is 3 miles from our home, has no grass or landscaping so we will manage the property ourselves until we really start to build a portfolio.  My wife has been a Realtor for several years and I have renovated the past 2 homes, mostly DIY flooring, plumbing, etc.

My Question is:  What would you say is our better scenario for financing & tax strategy

1. Investment loan (personal):  3.875%, 25% down, over 30-years

2. Commercial loan (we would set up an LLC): 4.5%, 25% down, over 15-years

My goal is to have consistent cash flow, but also make sure we grow wealth over the next 5 years and expand our portfolio in our "backyard". In other words, I'm more interested in setting up a long-term plan (leaning toward LLC, leveraging expenses accordingly, etc.), but also don't want to miss an opportunity to "Keep It Simple" and make good money.

Assuming I've provided enough rough information, can anyone tell me what might be a better scenario (personal vs. LLC)?

Thank you for helping out a noob!