LLCs or Umbrella Insurance for CA Rental Properties

[Christopher Smith]

I've been considering whether to establish LLCs for a number of California rental properties (and maybe for some out of state). Establishing a CA LLC has some significant start up costs especially if an attorney gets involved. Additionally, there is an annual $800 filing fee for each CA LLC (each year), not to mention the additional administrative requirements that must be adhered to to ensure full liability protection, and then finally the hassle of the LLC filings themselves.

That seems to be a fairly significant burden to incur on a property by property basis since these are only single family rental properties that generate only about 35k in rents a year. I've been told that umbrella insurance might be a better option, simpler, cheaper, while providing adequate coverage for most individual situations.

Any thoughts?