But then, some would argue that instead of LLCs (costly), I should hop for an Umbrella Insurance. 

We require all tenants to add us as "additional interest" on their policies, so we know when policies have been cancelled, but if a tenant chooses to violate the lease and not carry insurance they can eat the costs of their belongings if something happens. 

I imagine SF and MF have a lower cost to play? 

The breakdown of costs you've provided is insightful.

Are the costs for pre fab better in your area than a new construction?

See the 2020 aerial view below.Very little undeveloped private land is left in the Las Vegas Valley, and desirable areas cost more than $1 million per acre.

Since it is more than one year I own the house I was thinking to do cash out financing on 2 rentals...they both are worth around 125k and get 1500 rent.I went to lot of banks and everyone is quoting about 4000 dollar closing costs for each house for cash out financing.

However, I have some concerns about the potential costs involved in mold remediation, especially if it requires tearing up drywall.I'm considering whether I should inform my insurance company to see if they can cover the damage.

Who pays the closing costs on these deals? 

Let's break down the pros and cons of each approach:Forming an LLC in the State Where the Property is Located:Pros:Compliance with Local Laws: Establishing an LLC in the state where the property is situated ensures compliance with local regulations and laws specific to that jurisdiction.Legal Clarity: It provides clear legal jurisdiction and may simplify any legal proceedings related to the property in that state.Perception: Operating with a local LLC may give tenants and local authorities confidence in your commitment to the community.Cons:Additional Costs: Setting up and maintaining an LLC in another state means incurring additional registration fees, taxes, and possibly hiring local legal counsel.Administrative Burden: Managing multiple LLCs across different states adds complexity to your administrative workload, including extra paperwork and compliance requirements.Tax Implications: You may face tax obligations in both the state where the property is located and your home state, potentially leading to double taxation or complexities in tax filings.Managing Through Home State LLC:Pros:Simplified Management: Handling all properties under a single LLC streamlines administrative tasks, reducing paperwork and simplifying tax filings.Cost Savings: Avoiding the need to establish multiple LLCs in different states saves on registration fees, legal expenses, and ongoing maintenance costs.Consistency: Uniformity in management practices and legal structures may contribute to efficiency and ease of operation across your real estate portfolio.Cons:Legal Exposure: Operating out-of-state properties under a home state LLC may expose your personal assets to the laws and liabilities of the other state, potentially diminishing the liability protection the LLC offers.Compliance Challenges: You'll need to ensure your home state LLC meets the legal requirements for conducting business in other states, which could involve additional filings and fees.Perception and Credibility: Some tenants or local stakeholders may prefer dealing with a landlord who has a local presence, which could impact your reputation or relationships in the community.Ultimately, the decision depends on your specific circumstances, risk tolerance, and long-term goals.