Get names, titles, and possibly phone numbers, then start calling.Back in the late 90's, those two questions alone got me more great appointments and contacts than I could ever hope to keep up with!

I'd get actual numbers where possible like on taxes, insurance, utilities, yard & snow removal, etc then add 18% if hiring a PM to 'take care of everything.'

Or should we operate as sole proprietors and use liability insurance to protect against lawsuits and have access to conventual loan sources? 

Any recommendations for insurance on a 3 family in Rhode Island ?

I recently purchased a property and purchased landlord insurance.

I would contact title and get info on the property.

Then you can blame the lease when something unexpected happens.The lease/rents will be based on a portion of common area expenses, like the property insurance and taxes, the occasional re-seal the parking lot, seasonal sidewalk clean-up and roof maintenance; plus the upkeep of the tenant's space - spell out who will maintain the furnace and who will pay the plumber when the toilet backs up?

I say this as someone who made a title insurance claim within a month of buying my very first home.This is always true in general; in your case if you are acquiring from distressed/motivated sellers even more so.

Do you have to also pay 'mortgage' payments to someone else, insurance, the utilities OOP?

Just a bilateral agreement that specifies:The giver of the option, or optionorThe receiver of the option, or optioneeThe purchase priceThe term (start date and end date) that the agreement will be in effectThe consideration (typically a dollar amount) paid by the optionee to secure the right to buyPLUS whatever else your attorney thinks is necessary.Make the document recordable by your county clerk, get it signed (and possibly notarized), and then have it recorded on public record.The intent is to ensure that if he tries to sell to anyone else, a title search will find this agreement and trigger a title defect.