What are the steps to acquiring a rental property?

[Adam L.]

I have finally saved up enough to acquire my first rental property and I was wondering if anyone has a checklist/process flow of steps they'd be willing to share on how to go about this. What I mean is I am sure there are certain things I need to do before others such as opening an LLC before purchasing the property or speaking with a bank before putting in an offer. I have a step-by-step type of mind and I just want to make sure I don't miss something.

[Tom S.]

@Adam L.  That's one of the most debated topics here on BP.  My attorney advised "no", because it violates the "due on sale" clause most mortgages contain.  

When the bank finds out you transferred title (they will find out, because you'll have to switch your insurance policy and the insurance company will notify the bank), the bank has a right to call the loan in. It's unlikely it would be called, but it is a risk. There are other expenses and paperwork for an LLC too.

The recommendation I received is to get a good umbrella policy. You can get a $2M policy for about $500 pr year.  Also run a good rental business.  I've been in the business for about 15 years, I treat my tenants well and address any property maintenance issues in a timely matter.  I've never been sued or even threatened with a suit.

- Tom