LLC's vs Umbrella Policy

[Joe Salimao]

Hi guys,
I know it has been asked in many different ways before but I am looking for a more specific answer. My question is: Why have an LLC when you can just get an umbrella policy for 'x' million dollars on your properties. What will the LLC do for you that the insurance policy won't?
Let me just say I have an LLC and I think they are the way to go. My attorney, accountant and bascially every investor I have talked to said they are the way to go but I recently had a group of investors say that an insurance policy is good enough and the LLC isn't worth the hassle.
After thinking about it I am not so sure there is an advantage over the umbrella policy. What are your thoughts?
Joe Salimao

[Will Barnard]

Other than the cost, what possible disadvantage could there be? Thats true which is why you would still need to personally guarantee the loan unless you use a non-recourse lender. Of course you can. I just prefer to have the extra layer of protection via the LLC and there are disadvatages to a DBA such as the city wanting to tax your receipts. I would not say "most", but you are correct that many do start off without the entity and then once they have multiple properties, transfer them into an entity. That is simply bad information. Only a person who sells entity formation services would suggest such a thing. You can have 100 properties in one LLC, it is not the number of properties that should be the determining factor but the amount of equity exposure you are willing to "risk". Again, the set number of properties is incorrect, as is a set amount of worth. It is the amount of equity at risk that is the determining factor. :D