Why do you choose not to use one and what do you do instead? 

I am an investor based in Fairfield County, CT and just rejoined BP after many years away.From 2005-2011, I got up to ~150 units in SF & MF both rehab & new construction, Class B & C, but (regrettably) sold all to focus on institutional real estate and private equity.Since selling off, I got an MS degree in real estate and participated in most asset classes institutionally ($10-250mm+) with a focus on SF & MF.

OP can pay or he can choose not to.  

Property Management Consideration:If you choose to invest out-of-state, hiring a property management company is almost essential.

A lot of investors based in expensive markets such as Las Vegas are choosing to purchase their investments OOS in the Midwest because of the affordability and numbers making more sense.

If they choose not to pay, you can sue in small claims court for damages. 

Our clients trust us to do the right thing, not because we simply ask them to trust us, but that trust is earned through our actionsI think a lot comes down to experience when choosing the right PM for you.

South America is great if you choose a safe area.

What do you suggest is the best entity classification to choose from for a new, up-in-coming business owner to get the best balance between liability protection and tax advantages? 

The people who do that could be landlords, they choose not to, for various reasons but often the exact ones your detailing.