Is it for liability protection?

The LLC is there to protect you from liability when doing business by SEPARATING your business from your personal.

The tenants in the 3 bedroom rental aren't in a protected class but I do not want to get in any kind of legal bind. 

Quote from @Alvin Sylvain: I don't know of any special protection afforded you by placing the property in an LLC.

Texas tends to favor landlords in these cases, but follow the legal process exactly—any misstep could delay things.As for protecting against retaliation or property damage, installing security cameras (if you haven’t already) to monitor common areas might be worth it.

Since they (banks) have FDIC protection and these other "trust" custodian do not I am now looking at how to protect what we have.

If it is returned in full, the pref equity will receive their accrued pref before common equity receives their accrued pref + share of profits.So, common equity has "unlimited" upside but really no downside protection.

If you can network and find local players (FB groups, meetups) that could help speed it up

The entity you select can impact everything from how you're taxed to how you protect your personal assets.LLCs are often the go-to for real estate investors because of their simplicity and flexibility.

There are some players that operate thousands of SF homes.