Then it is pretty cheap to add an umbrella policy which will provide you with a ton of liability protection.

I am guessing that they will suggest that you require the Tenant to have:- General Liability (1,000,000/occurance)- Umbrella Liability ($1mm or more)- Professional Liabiity ($1mm or more)- Tenants Legal Liability ($500,000 or $1mm)-  Abuse/Molestation covered under the Liability or as a separate limit)- Business Auto Liability ($1mm)- Workers Compensation & employers Liabiltiy- If they paid to make modifications to the property to be able to operate (ie. ramps, special doors, etc.) they may need Additions & Alterations coverage depending on what your lease says on who owns those.They will probably seek to add requirements that shift the burden of Insurance to the tennant for something that you both get drawn into.  

If you're some cash rich secret millionaire buying houses in the ghetto that are unsafe then maybe a LLC makes sense...Just get umbrella policy and be done with it.

I also have an umbrella policy covering my basic assets.

@Colby MulryMany people on this forum utilize umbrella insurance policies or LLC's for asset protection. 

Below are my numbers.Purchase price: 80kDown Payment: 16kClosing costs: 2kAnticipated Rent: $1150ExpensesVacancy: $50 (some might say low, based on my experience, I think this is reasonable)Insurance: $20 (I have a separate umbrella)HOA: $197 (well run association with decent reserves)Repairs/Capex: $100 (I don't have a ton of experience, but I think this would be attainable.

Get an umbrella insurance policy and wait until you have assets to worry about an LLC.

Right now I'm using a large umbrella policy to protect myself with my property after a quit deed claim. 

And know what coverage you want, such as replacement cost, deductible, umbrella or not, etc.For my 16 unit MFH, I shopped around with 5 different carriers and went from $10k annual to $3800 for the same apples to apples coverage.

An LLC or a corporation can be an expensive endeavor that may not be necessary and you may be able to use a good umbrella insurance policy.