Otherwise, the risk seems to far outweigh the upside. 

There are a lot of factors to consider when get a cost seg study to determine if the benefits outweigh the costs.

agree with the other comment, different markets are doing different things. also, "be greedy when others are fearful." what people might be afraid of is, lots of commercial ARMs coming up on their rate adjustments, & the new rates (compared to 5y ago when they first purchased) will kill their cashflow, so they'll sell, and if everyone is doing this at once, supply might outweigh demand, everyone has to sell for less than they planned, and everyone who hangs on to their similar properties gets to recalculate their estimated mkt value with the new going cap rates. i don't personally think this is going to cause as insane of a shift as some people do, but it's all speculative, we won't know til it happens. if you can find a deal that pencils with 30y fixed debt, do it. 

For my situation, the advantages outweigh the disadvantages.

In my experience, my investors who expect to get in/out of the deal quickly don't look at rate as they'll be in a deal for 2-4 months and the benefit of no up front costs saved by paying no points far outweighs the difference in monthly payment from the higher rate. 

This is where the benefits begin to outweigh the costs. 3.

But the effort and cost to maintain 40 LLC’s would outweigh the benefit of a low probability risk. 

The question might be does the appreciation outweigh the headache?

If the tax benefits out weigh the costs, then you'll want to move toward that strategy.If you attend local RE meetups, maybe you could ask for recommendations there.

So does owning, yes higher but the tax savings you get plus appreciation FAR OUTWEIGH the extra upfront cost.