The purpose of the deposit is to mitigate your risk and ensure the tenant abides by the lease, takes care of them home, etc.

I understand the concern for flooding in certain areas, but I know that many municipalities are concerned as well and have plans to mitigate or prevent issues with this.

This will help mitigate your risk in future market volatility.

Did some wind mitigation so insurance will come down some.

Real estate is an excellent way to diversify, grow wealth, and mitigate taxes (assuming you have passive income from your tech startups). 

That's the risk here, but you can mitigate it by purchasing "due on sale" clause insurance which will cover the loan in the event that happens. 

For context, the water mitigation team that came out when the initial damage occurred 4 months ago was unable to locate the source—it was the roofer who repaired the flashing who said that was the issue.

If it is then it can’t be more than 35 Lbs fully grown and no dangerous breed animal even if it is a service animal (my insurance won’t allow dangerous breed animals).No evictions , ever.No felonies, ever.I have had outstanding results with this method here in the East Bay and in Cleveland with this method and I still have more candidates than I know what to do with, even with that criteria.Do what I do and set the criteria as above

In New York, Albany especially, rent control laws are on the rise so it shouldn't eliminate you from purchasing something with tenants, but it's important to mitigate risk.

The big issue here is that, even if you are completely in the right, and your property was in no danger of actually being stolen, it could create a real headache for you at a really inconvenient time.