I was under the impression that it insulated me in someway from lawsuits and gave me greater tax benefits than a personal route.My net worth is an issue at the moment.

With detached garage and mother in law suite detached.

The survival of one of the nation's largest non-bank mortgage servicing companies was thrown into question Thursday as the company was hit with federal and state lawsuits for allegedly failing borrowers with mistakes, shortcuts and other problems that cost some people their homes.Ocwen Financial Corporation allegedly botched basic functions such as sending accurate monthly mortgage statements, properly crediting borrowers' payments and handling taxes and insurance, according to a lawsuit filed in a Florida federal court by the Consumer Financial Protection Bureau.The CFPB also accused the company, based in West Palm Beach of improperly foreclosing on struggling borrowers, ignoring complaints and selling servicing rights to mortgage loans without fully disclosing mistakes the company and its subsidiaries made in borrowers' records.Read full article here...

You have $40k of equity that's at risk of a lawsuit.

Otherwise, that tenant likely has a free lawsuit they can file anytime it's convenient for them, even if the arrangement works for everyone now.

My (limited) understanding is that charging rent on a per person basis opens you up to lawsuits for violating fair housing  laws on familial status.

Increased risk of lawsuits.

And then we suddenly realized there's a condo lawsuit to factor in.In July, the HOA filed a lawsuit against the developers for $2.2M in construction defects.

One home we saw is 4,000sq/ft beautiful Victorian style on a few acres with a 900sq/ft in-law suit with all new appliances, hardwood and private entrance. 

Do most people do a couple of flips/buy some rentals before forming their LLC because they want to avoid the fees and they can use insurance coverage to cover any lawsuits?