Just Bought First House...Liability, Umbrella Policy, LLC?

Question

John P. · Answer

Thanks, @Jameson Triplett and @Elizabeth S.   I've been thinking along those lines.  I also have $500K on the property.  I think an umbrella policy is ideal for now.

Jameson Wildwood · Answer

One of the biggest challenges with LLC is that many banks don't have a lot of lending flexibility when financing through an LLC for a single family house or residental multi-units (<=4).

If you find or know of banks that do LLC stuff, please let me know but so far I've found that difficult.  I went the way of umbrella policy (around $250/year) in addition to a 500k liability on the property itself.

Plus there are beginning to be more ways that small single-member LLCs can be pierced.

John P. · Answer

Thanks, Mark.  I'm a numbers geek.  I'd like to make a data-driven decision based on probabilities and claims.  Umbrella vs. LLC discussions can be helpful, but some of the minutiae is beyond what I need to know.  Maybe the data I'm looking for is hard to find, though.

Michael M. · Answer

@John P.

As far as hard data goes, I've asked a similar question involving statistics, and if anyone knew the actual percentage of tenants actually sewing their landlords. Of course, no results, but that would be an interesting one to look over.

You can search these boards and find an endless amounts of the LLC / Umbrellas Policy dilemma. Some will say do LLC, some will say only one property? do an umbrella policy. Some will say do an LLC & and Umbrella Policy. Some will say to a Land Trust and an LLC and an Umbrella Policy...

Point being, you really have to find out what each thing does, and see what works for you and being realistic about it. Understand how much each one will cost you etc. and what makes sense.

-Michael