Losing liquidity for negligible increase in income (no income during the pay-down period).If everything is going fine, just keep hoarding cash for purchases.

@Joseph Tramonte You may not be able to charge the tenant for this because you mentioned the carpet is 10 years old and I believe carpets have a 5 year life so a judge may say it was time to replace them regardless of the tenant negligence.

If it wasn't landlord negligence or "your fault" then it's automatically theirs.

a $2M umbrella policy costs next to nothing, and unless you plan on being knowingly and exceedingly negligent to the point where your actions kill or maim multiple people, that will cover any liability you may have.

If the 10% cost savings is negligible to me and I intend to learn as much as I can about the discipline and conduct regular check-ups; what is the risk in hiring a Property Manager off the bat if I have NO personal EXPERIENCE managing properties myself?

If there is really gross negligence on your part in any activity, sure someone will sue you but like @Natalie Kolodij mentions, have a solid umbrella insurance policy and you will be fine. 

Financially, there is a negligible financial difference for me between, though a significant difference for direct bookings.  

that must be an Illinois law.The problem with seminars is that they give you generalized advice, the problem with generalized advice is that, it works well 70% of the time.... looks like you are the 30%The protection that the LLC gives you is liability protection of your personal assets, so if someone was hurt in your flat and there was a fault or negligence in the building, they would sue the owner (the LLC), the LLC's insurance would pay that bill, but if the damage was for more than the insurance, the harmed party would get the flat (or the whole ownership of the LLC) and you would walk away with your home and 401K intact.

As far as advice - you still have to make sure to vet the individuals and/or make the company liable for any negligence.  

Buyer shall indemnify Seller and hold Seller harmless from and against any loss or damage caused by the acts of negligence of Buyer or any person performing any inspection.