I’ve been told I should not do this and should open an LLC or some other umbrella company for liability protection.

If the property is held in your name, it's probably worth the time to look into an umbrella policy or something similar to cover your assets a bit more. 

Also you don't need an LLC to be covered, you can purchase under your name and just have an umbrella policy.Now yes you can go the construction loan route, hell the VA has a loan like that but that is up to 4 units. ( You may want to explore that as well) And other investing types would be with other investors, private money, and hard money.  

You might be better off just getting an umbrella insurance policy. 

Everything under the umbrella of your LLC is at risk. 

We’ve all seen the dozens of opinionated posts about LLC vs. no LLC, maxing out personal umbrella insurance vs. creating legal entities, whether it’s worth it to create holding companies, pros/cons of series LLCs, and so on.

@Martin NealI had someone advise me that I could ask my lender if I they would lend under an LLC umbrella.

I assume standard homeowners insurance + umbrella policy? 

If the various properties are all held in an umbrella holding LLC, they will distribute to the holding LLC. 

Some say sufficient Umbrella Policy and group a few properties under same LLC.