The owner's personal exposure is unlimited.

They seem to be an excellent way to hedge my real estate exposure...especially is the market keeps on sliding.Please let me know,Jim

This gives them additional exposure and also, possibly even more importantly, a different risk profile.

,I have personal experience and exposure to their products and services.

When the income is derived simply from buying and selling, especially if there is value added through the process, then that typically will be viewed as conducting a trade or business, and if done on a regular or repeated basis, would have UBIT exposure.So it is not the notes, but the buy, remedy, resell model that create the exposure.

I think you need to start all over, you have the OO cash out LTV assigned to NOO, after seasoning the refi is based on the appraised value, if you did get a second, then after that is seasoned it's not a cash out to refi the two existing loans plus loan costs, saying transfer a "conventional" loan to an LLC, if conventional means secondary market, no, they don't take notes in a company name unless done for estate planning, might be in portfolio, but it's not marketable and banks don't hold unmarketable 30 yr fixed rates due to the rate exposure.

Would you have the umbrella insurance if you didn't have the RE exposure?

You'll have to do things their way however it can give you the exposure you need by giving you a client base to work with that you don't have yourself.

If you have a $1M umbrella, it adds $1M in liability coverage to all exposures under your own name.

I came down to the same reasoning as @Jesse Hyder with cashflow and @Kyle Z. with vacancies (or reducing risk exposure).