My reference to asset protection is that the larger percentage of your total investment is in one asset, the more potential loss you can suffer and therefore there is more risk in "having all of your eggs in one basket" than in diversifying your portfolio as much as possible.

My initial thought is that this idea may suffer the same salary ROI concerns and free cash flow problems brought up by other posters, further delaying property acquisition. 

One must know the applicable laws, rules and regulations because weather you are up to speed with them or not, your going to be held to them, and suffer the misery if ignorant of them. 

It seems you suffer from "analysis paralysis" -----  I suffer from the same thing :)  After years of talking and thinking I finally made the leap. 

However, on the flip side, I'm also noticing and reading that I'm able to offset my w2 income taxes from losses suffered by an LLC.

You are in a Tenant at Sufferance situation:A tenant at sufferance is the situation when a tenant of real estate continues to occupy the premises without the landlord's consent after the original lease or rental agreement between the landlord and the tenant has expired.

Whether from a bad sponsor, a black swan style event, or just a difficult property (even the best sponsors get those from time to time), the split A/B structure has one side effect that many people either ignore, or are not aware of at all.It is entirely possible that in a downside scenario, the class A investors could get all of their money back, plus the stated rate of return, and the class B investors could suffer a 100% loss.  

You could potentially file a motion for emergency relief and make the claim that you would suffer irreparable damage if you had to wait until the end of the legislative session. 

They tend to suffer from bad publicity in general.

This just takes you into an arena full of scammers that are being cracked down on, you may have great intentions, but if you fail or clog the process or don't perform it will be easy to get tagged as a scammer and suffer the consequences.I know what gets said in these situations, I've been on both sides as a lender and buyer many times over the years