Are there any long term or short term advantages/disadvantages in doing it this way?

Your decision; both options have advantages and disadvantages.

The banks I have spoken with prefer that those properties be held in an LLCAside from lending, there are other disadvantages / advantages of having an LLC. 

Also, people trying to sell something start at a bit of a disadvantage, because sophisticated readers can see through the content.

And the biggest disadvantage are just that there are a lot fewer of them than 3Fs.

What are the gotchas and disadvantages?

If I charged tenants for water, even if I discounted the rent appropriately, it would create bad optics from the tenants' perception and would create a competitive disadvantage for me, having to "sell" each prospect on the merits of being in control of their own water usage, since having it included is what everyone expects.(2)  Here in NY the water bill goes with the property, not the occupant. 

If the suggestion was that you allow seller to transfer to you via quitclaim, here's one way that could play out to your extreme disadvantage:  Seller transfers to you via quitclaim. 

What are the advantages/disadvantages of purchasing this property as an investment (using my LLC to buy it using a loan) versus getting a loan myself and buying it as a second home?

I went over to my friend who was a jet engine  engineer, and being full of enthusiasm for having just landing on the island, I said to him:  "There must be a lot of advantages and disadvantages of living on an island."