LLC vs personal umbrella coverage for investment properties

[La T.]

Hello,

I am buying 2 investment properties.

Am trying to decide between creating an LLC and getting Business liability coverage for the properties or just covering them using my personal umbrella insurance.

Any suggestions are appreciated.

Thanks.

LaTha

[Steve Vaughan]

Funny how people don't describe the properties at all that they are buying when seeking advice on something as important as this. It's not just you @La T. Are you buying strip malls? Mobile home parks? A 25-unit multi-use building? Yes, I protect my commercial properties with an LLC.

Single-family, site-built home? No way. Plenty of coverage in my opinion with a LL and umbrella policy. Double no if you need to finance the SFR conventionally. Lenders and insurers for the most part hate it when residential assets are crammed into a business entity. Can be done, but at much less attractive terms. Bookkeeping and tax headaces as well. Hope that helps.

@La T.