Credit Union offers loans for LLC, but must personally guarantee

[Heath Neely]

So I before I started shopping for my first property, I called the mortgage broker that I used the last time I purchased a house. I decided that the rates and closing costs he quoted seemed reasonable for a 30 year term. I decided that I would just go that route with an umbrella policy, and not register as an LLC, at least not for a while. So on a whim, I call up my local credit union. They offer an LLC (or sole proprietor, doesn't matter) 5 year adjustable, based on the current 5 year treasury note (currently about .5%) + 3.25%. It is a 5 year fixed, and the last 10 years are adjustable. (Can be capped for 5 points). They also have an option to amortize the 15 year for 25 years with a balloon. So far, I was tempted to go the LLC route if the property can cashflow with a 15 year mortgage (not considering the balloon). For an LLC, you must personally guarantee the loan, which at first, I thought, fine, that makes sense. Then my wife asks the obvious questions about the LLC and the veil of protection. Let's say we own 10 properties and have mortgages on all of them. A tenant breaks a leg and sues for an exorbitant amount of money and wins. All the companies assets are taken. Now we owe mortgage payments for all 10 properties, but have nothing, correct? If so, what did the LLC protect us from? The deeper my thoughts go, only unsecured loans make sense, otherwise, you might as well just go at it as a sole proprietor and finance with 30 year fixed conventional loans, right? Please help me to see if I am missing something.