This is my first experience with new construction and i'm not sure how we should properly protect our equity from lawsuits in this situation.

If we flip, it's a non-issue.And, sounds like an LLC (for REI purposes) will only serve as a legal protection entity against my wife and I; there are no taxable benefits we can take advantage of.

Good luck on getting them to admit and pay for their mistakes.They will just come back and say it's the owners responsibility to research and accept the tenant and risk or not.That is why you put in hurdles as an owner for protection depending on who the tenant is. 

At what point should I form an LLC or something similar to help protect my family and my future investments? 

I have done a little research but heres what ive gathered: -They are commercial loans, so they will need to be lended to my LLC but with me and my wife  protecting them with our assets -It is a different process to qualify for a commercial loan -it does not hit my personal credit, as its a loan to my business, im sure theres some impact if we were to default -It can cover all three properties, as if it were one, while still giving me the ability to sell one if need be. 

Tenants could scream that you were responsible for protecting them and you let them down.

Even with all that experience, and multiple layers of protection from bad contractors, we have still been robbed twice in the past 4 years by shady and/or desperate contractors.  

Normally people will look to lower risk and protect cash for the golden years. 

Even if they have a good track record or training, make sure you're protecting yourself. 

How do you guys protect yourselves from this?