As for the legalities of setting up an LLC to protect you and your partners, I would consult with an attorney for best judgement. 

They obtain and manage capital, whether it’s private equity/debt, bank financing or personal capital.

The major pieces of information you are missing include NOI which includes deducting all of your operating expenses from your gross rents sans debt service, market dynamics (what are vacancy rates and asking rents like in the market the building is located in?)

The requirement to do this generally involves an experienced GC signing on the borrowing entity as a 20+% owner thus making them a signatory on the loan and responsible for the debt which in most cases is not very easy to find.

I don't anticipate things to be that bad this time, but the value dropped over 25% back then and we are unsustainable at the point of the affordability cycle we are at now.You basically will be buying a monthly debt, speculating the value of the property is eventually going to go higher than you bought it for.

Do not rely on it for legal advice.

This is both a legal and tax question. 

To defer all of your gain, you'll want to trade up in value, replace all the debt (meaning new properties have at least $350,700 of debt), and not take any cash from the exchange (this is boot which = taxable gain).As for replacement property, it just has to be real property - meaning it can be commercial, STR, land, etc!

I understand this is not a requirement, but I have never received a damaged unit from an inherited tenant or any legal issues.

I am sure a Thumbtack PM works great when something legal goes down lol.