LLC Liability Question

[Marc Cleverley]

Hypothetical Question regarding an LLC I will be forming. Say my team purchases a property, rehabs it, then sells the property. Everything goes well, no issues. At that time we move and make an offer, and purchase another property to rehab. The owner of the first property we flipped comes back and decides to sue our company (for whatever reason). We have business insurance but is there a way the insurance would not cover enough that this guy can come and attempt to go after our new property? Should you be setting up a new LLC for each property you purchase? How can this risk be mitigated appropriately?

[Steven Hamilton II]

My recommended idea there is to have a holding LLC that holds title to the properties and then a contracting LLC which actually does the rehab.

The holding will have very little income. The contracting will show an equal half or more of the profit; this can also help toward working on credit line.