They know the law and can protect you from problems.

My husband and I looked at a fourplex in Berkeley and didn't get too far, as the tenant protection laws are probably the strictest in the area. 

Worse, lawyers do not agree between themselves.If you believe that asset protection is important to you, then you need some entities.

Lenders that don’t require an appraisal will perform a desktop appraisal but will typically have a very conservative view on the value of the property to protect the company’s investment.

This protects you from someone coming after your assets by separating them and it gives you the benefit of pass-through taxation.Here is a quick read that lays out the pros and cons of forming an LLC:https://www.biggerpockets.com/blog/real-estate-llc-not-best-option

This article goes into why you likely will want both to protect your assets.Best of luck!

What would people suggest we do with these storage units to legally protect ourselves if tenants property is damaged in the basement?

My daughter suffers from severe animal allergies. 

It's a little steep but you can walk to the River from the back of the house.The owner of the house recently passed and the house is suffered from neglect.

I’m aware that having properties under an LLC is a smart move for liability protection, I’m just not sure which business entity formation would be best for 3 people involved.