*No need to mention to me umbrella policies.

People often confuse hard money, NonQM, bridge, fix and flip, PML and other forms of lending as one umbrella of PML. 

An umbrella insurance policy is much cheaper and far less complicated.2.

Insurance would cover it, I would pay the deductible, and no assets would be lost.If you are in an area like San Diego where people are more likely to sue, a judge is more likely to find you guilty, and the payout is expected to be higher, you may consider an umbrella insurance policy.

Also, would I need an umbrella policy if I go with commercial grade policy?  

Insurance would cover it, I would pay the deductible, and no assets would be lost.If you are in an area like San Diego where people are more likely to sue, a judge is more likely to find you guilty, and the payout is expected to be higher, you may consider an umbrella insurance policy.

A better idea would be to get a stable of solid rental properties under your umbrella and use the profits if you like to run your recovery home. 

If they are related the same ownership/umbrella as Specialized in DFW, you can expect:Pros:-  Really great online portal.  

So my plan is to form the LLC later and just take the risk of operating without an LLC and just have landlord insurance and umbrella insurance to start out.

Start getting quotes on property insurance, general liability insurance, and an umbrella policy.