Can a rental be run as an LLC without transferring ownership?

[Michael Ndjondo makadi]

Several questions to CPA, lawyers or just those who might have better knowledge. For perspective, the property is located in San Diego, CA where I live also. 

1. I was told and read that the property MUST be owned by the LLC to enjoy the liability protection. However, my current priority is not liability protection as we (my spouse and I) only have one rental at the moment and do have an $1M umbrella coverage. We want to take advantage of the tax advantage offered by the LLC though as we were told rental losses (stemming from major rehab and depreciation mainly) can only be claimed if the rental is run as an LLC (for my case) since the W2 household income is above 150K. is this true? In case it is, that's where the need of setting up an LLC arises. But since the refinance will done in a couple of months with a subsequent addition of 2 units later this year, we want to keep the ownership for easier and cheaper refinance and subsequent construction loan. Only after that, we could proceed with the ownership transfer (we are aware of the due on sale clause). So, my question is will it be possible to set up and run the rental as an LLC while we do own the property under name?

2. We do plan on scaling our portfolio by acquiring several properties next year (primarily in San Diego, CA and possible in Dallas, TX as well) and was thinking about what would the better way to structure everything trying to balance cost of borrowing as individual vs liability protection. The first option is to create just one LLC, acquire and keep all properties under our names as long as it is beneficial and increase our umbrella policy coverage with significant equity in each property (25% at least). Not sure what's the max amount yet. The second option is to transfer ownership to separate LLC for each property ASAP and create a master one for "easier" tax filing. For this option, would it be wiser to incorporate in Dallas, TX for those properties purchased there? What about the master LLC (CA vs TX)? So, my question is which option is better and whether there is another option that I might have overlooked.

Thanks in advance for your help.