For us, we have insurance on it and found it easier to keep in the trust vs. llc and have to deal with state filings etc. 

We're new to real estate and would appreciate advice on our current home in Texas and our future place in Oregon.We love our house in Austin and aren't ready to sell, but as a long-term rental, it would yield (from what I understand) negative cash flow, covering principal and interest but not taxes and insurance.

If I were you, I'd pass on this property and look for something else (and I suggest a 3 BR) under $80 that you can put a little rehab into, unless insurance pays your family member a bunch of money and they accept a much lower price. 

Rock that for about 12 months and add some equity and then you could refi out to conventional so as you pay it down in the future the mortgage insurance will drop off.

While an LLC can offer liability protection and tax benefits, it’s not essential for a single property—personal liability insurance and an umbrella policy may suffice for now.

It's very cheap and not difficult to maintain bond/license/insurance.

When valuing the property, focus on its net operating income (NOI) and use a cap rate that reflects Section 8’s stable, government-backed rents.

In speaking with our insurance agent, we decided not to make an offer.

Our entire network of agents, title companies, insurance, conventional lenders, private lenders, and many others come together to make this an enjoyable experience.

Make an insurance claim and buy all new stuff.