You should do an analysis like Michael mentioned to look at the annual fees, plus extra tax compliance you'd be taking on by forming an out of state LLC or entity.  

@Dominic Ruegemer -  1.) 

If you invested that extra $500k you could be bringing in an extra $4k/mo, 2k/mo if you are VERY conservative.

. $0 in the deal, with an extra $5,750 in my pocket and $180 a month in cash flow.

(Ensure the prorated rents, security deposits, other refundable, last months rents are included in closing documents).the additional LLC isn’t needed to manage cash flow unless you plan on becoming a property manager for third party people and that would be separate from the apartments LLC.An LLC doesn’t get extra tax benefits due to structuring.  

I know we are being extra careful and will have to operate at a slight loss for a few months, but as long as the current tenant keeps paying his rent, we can weather the storm for a bit longer.

My goal is to have a couple rentals to have extra income for now and enough to survive if I ever lose my job or become disabled. 

If anything it makes you be more conservative since the deal really has to work and you can't tell yourself it's a good one because you're getting extra cash flow with no debt service.A true cash deal doesn't leave all the money in the deal, the additional cash flow will replenish the $5-6k/year you reference.

I didn't buy any books, or extra study helps.

Can the extra loan amount be used for rehab purposes?