There's acceptance and bargaining and rationalization (not necessarily in that order, Kubler-Ross and the "five stages of grief" linear model is more an artifact of pop psychology than useful cognitive-behavioral therapy).

Oh yeah and if you don’t experience the downturn, how will you know the psychology of the customers in your area the next time poop hits the top and goes ka-poop

-Darren HardyIt's a psychology issue, not a finance or knowledge issue. 

Your tenant could be a jerk or have a psychological or mental issue.

The psychological damage here is going to last for a long time.

Now, there are downsides to this as well since, as you stated, there are additional carrying costs associated with the loans, and in my personal opinion, a factor that most people don't factor in enough is the psychological effects of the debt.

A LLC is more for psychological reassurance.Provided you are a responsible investor/property manager there is little requirement beyond having full insurance coverage.

To be honest, I didn't have much of an idea of how to price things out, and in terms of investor psychology, I probably wasn't willing to walk away and I also hadn't really slept since the first conversation with him; nerves, I guess. 

We have found majority of tenants to be psychologically prepared to pay greater than $2000 per month + NNN, and 1600-1800 SF capitalizes on that fact perfectly in most markets.

However some people are more comfortable with the idea of dealing with it as a financial chess piece; for others, it's the emotional and psychological stability issues that are more important.