I could buy a LOT of umbrella (additional liability) insurance for $13,000.

The property was rented and generated $160 cash flow after mortgage, taxes, insurance and property management fees were paid.

I guess it can save you some time managing, for example one tax bill, one insurance bill. 

I'm assuming you are arriving at your cash flow number by applying Gross income - cap ex, maintenance, utilities, vacancy, tax, insurance, mgt, landscape/snow & Debt service?

.$275000 with 25% down, taxes $4080, insurance is 3000 yr and rents is $3800 month, Water $400 mth. 

It also negates the need for insurance - although that isn't our MO. 

This is a passive way of earning with real estate-based security, protection and insurance.

It also requires different reporting of that separate interest expense on the K-1 each year so the partners know they have the obligation of tracing that interest expense to however the partner used the distributed proceeds.I typed all this up and realized Mr Brooks has left the building and posted this 6 months ago, but hopefully someone else will find this useful!

For structuring your business, consider whether you actually need an LLC or if umbrella insurance might be a simpler alternative.

If you notify your lender, they are obligated to say "no".