Insurance versus an LLC

[Hagay Yunger]

Hi, 

I am a relatively new Real Estate investor. I know that many investors form an LLC in order to mitigate a potential liability in case of a lawsuit. The question is – is there a type of insurance that covers/mitigates this in an equivalent way as an LLC does?

The reason for this question is that if I'm planning to have several properties ( and I do :-) ) I will end up eventually with multiple LLCs which I'm not sure I would like to.

Also, what would you recommend to have in a standard insurance, as a landlord?

Thank you!

Hagay

[Kyle J.]

This is probably one of the most discussed topics on here with lots of different opinions on both sides.  There are pros and cons to both, and each has their appropriate use depending on your individual circumstances and what you are trying to accomplish. 

My personal opinion is that if you're just starting out, I wouldn't get too hung up on whether or not to set up a LLC. If nothing else, you'll lose out on some of the best financing by having your property in a LLC. Just get good insurance, to include an umbrella policy (you can usually get a million dollars worth of coverage for about $200-300/yr), and operate your business legally and responsibly and you should be okay.