I just have a little to add:
I started an LLC for my properties from the beginning, because I'm a tax guy so I'm very familiar with them. I'm aware that an Umbrella Policy generally offers more protection. I've seen this debate several times, and I have not found a clear winner. I would say it depends on what helps you sleep at night.
If you purchase in an LLC, you can get credit right away. Your best bet is a local bank, and they'll usually require 20-25% down (unless you get lucky), and you will need to personally guarantee the loan. I think I only had to visit 3 or 4 banks until I found one. If you buy in your name and it's 4 units or less, you are eligible for most of the typical consumer/homeowner loans.
Regarding not paying capital gains tax if you live in one of the units, it gets tricky. You still depreciate the part of the building being held for rental, so you would pay the tax on depreciation recapture for those units. You would also have to allocate the gain on sale between the number of units, and your exemption would apply only to the unit you live in, not all of them. To keep things simple, we won't talk about like-kind exchanges yet.