I am a first time SFR investor currently in the process of looking for a property and was wondering if I should start an LLC off the bat, or I've heard I could get an Umbrella insurance policy?

Would an umbrella policy be better until rates come down?

@Lauren B. the only way I could imagine you (as you describe your situation and investing approach) might be leaving money on the table is if all of the following were true:There is a rental property you can buy in an Opportunity ZoneYou can buy it with capital gains (eg. you sell an appreciated asset, then use the cash to buy the property)You then invest additional cash from capital gains into the property at least equal to the prior building value (this is a BIG hurdle - multifamily residential buildings don't warrant this level of rehab investment)You plan to hold and operate the property for 10+ yearsYou do all of the above under the umbrella of a Qualified Opportunity Zone Fund, which you setup and manage (with the help of a qualified attorney and CPA)As you are discovering, making all of these things true is not really feasible for you.

They will do a direct first position mortgage, whether on an initial purchase or as a cash-out on a property owned free and clear by the 401(K).Any resulting liquidity will fall under the umbrella of the 401(k) and must be used by the 401(k) for additional plan investments. 

All that being said, most other investors I know don't even have an LLC but do have a pretty large umbrella policy for their rentals.  

-Liability - $300k vs $500k per building vs $300k + $1MM umbrella policyMy net worth including equity is ~$300k, $100k equity is in a duplex in my name (house hacking).I've read to establish the liability around your net worth.Would having a liability insurance on each building of $300k be very risky if that's my net worth?

I used to be a very caring landlord,responsive and of course proposing a great house in Good condition,but for 2 years I was almost not sleeping at night thinking an accident/personal injury/mold related health issue could happen and consequence of this would be them suing me for eventual High medical bills or else,which could mean losing one or more of my single family homes as they were all under my personal name,The point of my post is that it seems you cannot follow a "by the book equation" that would 100% prevent you from this to happenOkay I had the biggest umbrella policy up to 5 Million in coverage,but I have a limited trust into insurance companies,I can easily imagine them finding a way to not cover the problem if needed with some clausesI always was specially paranoid about MOLD,especially with the houses being in Florida,although the premises seemed to be totally ok at move in,you will always be told that there are some mold in houses in general,so the situation could quickly change without you noticing even with constant control,I add a very nice old couple as tenants but at one point they were telling me they had health problems because AC was not working for a day in order to have it fixed quick(of course as usual I respond or act fast to resolve the issue but this just ringed to my mind what could happen if they would get very ill and need to pay a crazy medical bill...)

My questions specifically are: should i necessarily worry about starting an llc so soon or just have good liability with an umbrella policy?

Any other market option will be appreciated.I want to get some perspectives and advises from those who have experience investing in either out of state multifamily properties under a LLC umbrella or just RE investment overall experience:1. what are some of the possible pitfalls of investing as a team under a LLC?

We have all of our insurance with USAA (cars and primary house) as well as a $5 mil umbrella policy.