Thinking I don't Need an LLC?

I’ve been trying to do some research on the ever so popular LLC question. Basically I am trying to determine if I need to create one (or any business entity for that matter). It sounds like in my situation (I plan on flipping and investing in rental properties) it may not be necessary. Here is what I gather having read numerous posts on this subject within this forum.

  1. An LLC really does not provide much asset protection unless I have several million in NET assets
  • I’ve seen BLL post that insurance liability coverage should be sufficient to handle most claims. Is this considered just general homeowners insurance or is it some type of special insurance?
  1. LLC corporate veil is easily pierced (since I will be sole owner of the LLC) - albeit I plan to hire separate property management hence separating myself if that makes sense (reducing my liability from a mgmt perspective?)

  2. There are no tax advantages of LLC since it flows through

  • If I do not have a business entity, can I still write off ‘business expenses’ (I live in CA but have investments in Missouri so flying out and staying at hotels can add up)?
  • I also have a full time job and will be doing RE investing as a second venture.

I know every situation is different and I probably need to provide more detailed info to get a more accurate response. I do plan on working/talking to a good RE attorney and accountant but I wanted to do my due diligence as well. I’m a total noob so feel free to set me straight on anything I may have mis-represented.

  1. You are correct. You are going to purchase hazard insurance for each rental property anyway, so just get a liability rider for the maximum amount the insurance policy will allow. The policy will come with a standard liability coverage limit (say $300K), but, if you can increase the liability limit to $1 million, it should only add about $25 to your annual policy premium (in most states).

  2. Outsourcing property management will also allow you to invest in areas that are not close by. I have rental property in three different states, all under professional property managment.

  3. As a general rule, the passthrough LLC is tax neutral. That is, your income tax liability is unaffected by the presence or absence of an LLC. You get the same legitimate business deductions for your rental activity without a passthrough LLC that you would be entitled to with the LLC.