Questions about LLC's/Umbrella coverage

[Account Closed]

I'm wondering if anyone could explain if I should opt to put each property into its own separate LLC or just get umbrella coverage for all of my rentals for maximum asset protection?

Also, if said rentals are in an LLC, will the income/debt from incurred from these properties count towards my debt/income ratio?

[John Warren]

@Account Closed this is the age old debate here on BP. The issue is pretty simple though. If you are buying SFRs or small multis, you really won't be able to put the stuff into LLCs unless the banks who hold your notes will let you. You can trigger the due on sale clause in the mortgage if you do. I went through this when I purchased my first four unit property in Lyons, IL. I ended up keeping it in my personal name. The side benefit is that I also will have more creative options with that property going forward. I can easily refinance it, cross collateralize it, etc.

I am personally picking up a million dollar umbrella policy this year for the first time. As I expand my portfolio in the Chicago suburbs, I am just now reaching the point where I feel my risk justifies the expenditure. Honestly, the umbrella is cheap enough that I should have done this a year or two ago. At about $280 per year, I would recommend picking one of these up as soon as you feel you need it.