I will let him know that there is nothing I can do and he needs to contact the police department (which he now does whenever a confrontation happens).

I do not know the landlord's angle for reporting a higher deposit.If you suspect fraud, don't confront your landlord, but rather report it to the county housing authority.

@Ian Walsh  No worries my friend promise no confrontation.

My gut tells me is was an agent that was previewing the property, but, of course, you never want to confront on something like that

Owning a management company we have to confront this issue pretty frequently.  

If they can't handle confrontation, or the neighbor refuses to quiet down, then they can report it to Code Enforcement and let them handle it.

I confronted agent, who said, "I'm only friendly, we aren't really friends."

I can't see most of my friends real estate investing due to fear, not knowing how to assess rehab costs, and not wanting to deal with the confrontation that can come with dealing with tenants and contractors. 

When confronted with a difficult decision I like to ask myself "If I take action X, what will that look like 5 years from now?" 

Real estate investing compels you to find inventive solutions when confronted with challenges.