The private lender can be your cousin or your friend Bill (who should check with a lawyer just to ensure there are no licensing things for one-off private mortgages).This is still going to be at a higher interest rate (well, unless Bill is just doing you a favor and only WANTS to charge 3%...), but it's only for about 20% of the acquisition cost of the property, rather than going hard money where the ENTIRE acquisition cost is at a hard money interest rate. 

This is not very expensive and is easy to do without a lawyer; they usually don't even show up in court, so the Judgment is automatic and at least there is that much satisfaction.

I was informed by a few lawyers that this type of LLC has not been seriously tested in the court of law so they are uncertain as if it will add additional protection or not.

I still need to check with the lawyer, but I'm wondering about posting signs that say something about resident and guest use only, etc...

Choosing a particular style of communication and sticking with it (for evidence reasons), having an eviction plan in place that you follow to a T (developed in conjunction with a local landlord/tenant lawyer), and generally refraining from making exceptions to your written lease.For information beyond that, or how such things may apply in your jurisdiction, you must speak with a local attorney.

That is why we have lawyers, right? 

(I'm not a lawyer, either.)

A guy goes to a judicial foreclosure auction and manages to pick up a house worth hundreds of thousands for $1K.The lawyer representing the bank was supposed to show up and make a full credit bid but he got stuck in the court restroom.The law firm and/or the bank are screaming at the county constable to do something but the law was followed and they are out of luck.I don't know how the story ends but I imagine that either;a) the bank made him an offer to good to refuse wrapped in a thinly veiled threat of legal actionb) they got a temporary restraining order and then buried him in lawsuitsc) being the easy going fair minded people that they are, they cut their losses and moved on

How much is the lawyer?

An individual lawyer can have a great practice, an admin, client base, etc. but when she/he retires there's very little value there.