You always need money for the unexpected. 

Did I ever believe there would never be another unexpected earthquake?

Her fear was that the hospital would unexpectedly cancel the contract in the middle and she would be stuck with a big loss of $$.

I would just have someone on backup to help just in case you can't take care of it unexpectedly.

If you can get protection on the downside and you have to sell unexpectedly, then you can reduce or even eliminate your loss. 

Meanwhile one of you gets in a car accident and you both lose all the co-owned properties if they’re in an LLC or not. 

Any illness or accident or job loss can make the whole thing blow up and you don't mention a working spouse to assist is the event that things do blow up.

What you have to worry about is if in 5-10 years value take an unexpected drop now your holding overpriced real estate and we went through that in 2008.

Having a clear plan showing a variety of “if bad things happen” scenarios plotted out (economic woes, bad tenants, unexpected expenses) B.

If your house is paid off, you are in a good position; but the last thing you want is to grow your RE portfolio too quickly and not have the reserves needed if you have an unexpected repair or vacancy.