But he has clear advantage of getting much larger deposit (landlord in most jurisdictions is limited to collecting 1.5 or 2 months' rent payment, which he must place in an escrow vs. $8000-$10000 Scott can collect and use for any purpose the next day). 

The deposit amount when working with a lender comes from the lender - it is basically the amount of skin the lender wants you to have in the game. 

With the tech I am using (a lesser known PMS) I am able to automatically screen guests, get their selfies, write leases, and collect deposits in my work flow even for Airbnb guests.

Unless you have a massive deposit relationship with them like 1m++++ then they may do 20%That said they will finance the rehab if you’re a strong borrower and it pencils. 

I am looking into a company right now that does rent guarantee insurance and also does in lieu of deposit will issue a bond that the tenant basically gets charged a monthly fee for.

I have a separate interest bearing account for security deposits as required by my state laws.

If you know that something major will need replacement in the future, increase the monthly amount you are depositing into your reserve fund.

Generally speaking, with SFR or small multis, I just rely on the lease/rent roll (and some form of proof of payment; i.e. bank statements, deposit receipts, tax returns, etc.). 

We did give 50k deposit up front which he says he will use towards finishing up.

As a PMC, we allow tenants to:1) Mail in rent (we charge a Processing Fee)2) Deposit at our bank (we charge a Processing Fee, but less than the mailing one)3) Use Zelle, Venmo, etc.