A standard roleplaying environment: the tavern. This is another easy one to create in your own home, providing you have a large enough group of roleplaying friends. Let us assume your PC group is no larger than five, and that the rest of your friends can be NPCs. Let us also aim for an exceptionally seedy and unscrupulous city tavern.
In a good LARP it is desirable to separate the players out individually at some stage, because they are more suggestible and afraid when they are alone. Some form of individual challenge is probably the best way of doing this. One possible setting for this is a cave system, and it is probably one of the easiest to recreate realistically, and one of the most perfect for playing on fears of claustrophobia and darkness.
Forsht Bligo is a dwarf who loves the taste of blood. He's become quite the connoisseur over the years. Pigs blood, sheeps blood, cow's blood, if it's red and warm, Forsht considers it a delicacy. The fresher and hotter the better. Forsht will often sneak up on cattle, prick them with his dagger, and catch the flowing blood in his orc-skull drinking cup. His life goal is to taste the blood of every living animal. Although he has not yet sampled humanoid blood, he is not averse to doing so if the right opportunity presents itself. He is not particularly unpleasant if approached and can be easily befriended. Its just that he simply can't get enough of the "Juice of Life", as he calls it. Forsht's troubles come in the form of frightened and angry villagers who have proclaimed the misunderstood dwarf a vampire. Since Forsht is amused by this, he does little to dissuade anyone. This will lead to some dicey situations for Forsht in the near future.