I like the liability protection that comes from separating out the businesses.

No need to create a business entity, for those who are truly small (just be sure to beef up your insurance, if you don't have at least a properly run LLC, which will cost you a few hundred a year - the insurance is cheaper for those with one or two places and who own a house, cars, boats or have liquid assets other than IRA/401K -- which are somewhat protected).

States put real estate license laws into place to protect consumers. 

So, while you'll need to offer an incentive to a PMC to find suitable tenants and not just throw anyone in, you'll have to protect your downside somehow.

I'm also a member at the The Landlord Protection Agency which is an educational website from which I've learned much although I did buy a membership there I think there's quite a bit of free stuff available.. https://www.thelpa.comI love this stuff, and I believe there's no better way to generate real wealth.

In my opinion, most people will tell you to do #1, but I would do #2 so you can keep your heads in school and learn and grow inside of a safer investment with HOA protecting you from some of the major expenses that could come in a house hack.

It was about getting an insurance policy to protect you in case the bank calls a loan from the “due on sale” clause.

Is there a way to protect my deal here, or should I go into contract first? 

We have a 12 page management contract that we've added our real experiences to over the years, with the intent of protecting both us AND the landlord.

Up until now, we have not used an LLC to purchase or protect any of the properties mainly to limit down payments to 15% instead of 25% as liquid cash has always been the hardest to come by.