If one day I'm unfortunate enough to loose it all to a lawsuit, I'll sleep just fine knowing that I have more knowledge now and will be able to earn it faster the second go around.I know plenty of folks who have made small fortunes in real estate that couldn't tell you what an LLC is.  

If you need permits to do the gut you could loose your grandfathered in zoning.  

If a realtor does this it is called a "net listing" an it is illegal, they would be fine, loose their license, and could go to jail.  

Another downside is you loose on the advantages, of the Federal Tax Code, by not closing in the name of a LLC.

Now in this financial mess these things can always be altered because we need the income and don't want to loose tenants.

Once you purchase you are going to be committed and the transaction costs will loose you money if your investment doesn't work out.Everyone has different risk tolerance, but I would personally not own any rental property as my first buy and hold that I did not live near (< 1 hour drive).

There's writing on the wall, holes punched in the walls, the carpet is filthy, there are fixtures broken, door handles loose and now some appliances aren't working - obviously from being manhandled during use.

But I deal with it by looking at how so many people are loosing their properties because they over leveraged themselves and I know that what I have is free and clear.Even though I cant play as much right now as I would like to, I know those times are comming (retirement).

And of course remember that often when it rains it pours.I had smooth sailing this year with only minor to no repairs until June and then all hell broke loose.

If they get loose, they will chew.