When should I start looking at forming an LLC?

[Pedro Chavarria]

My wife and I are starting to get into Real Estate investment with our first rental property and now we are wondering when it's a good time to form an LLC in order to protect us. We both have some assets (current home, 401k, stocks) so we want to be sure we are protected and that it makes sense from a tax perspective and financial since the first rental so cashflow will be minimal.

We've talked to different people and some recommend just the Umbrella insurance, to begin with, while others recommend going LLC+Land trust from the beginning. We know we want to look into an umbrella but is that enough with the first few properties until they can make the money to cover the cost for the LLC? Or is it better to put the money in now and have all the protection?