you are going to have difficulty assessing what damages she is responsible for and what may have been pre existing.

Seller did not disclose pre-existing drainage issues of the property. in the offer, we specifically told the seller NOT to do any work in the duplex. 

It's a lesser financial commitment than buying a house and they know if there are serious pre-existing conditions that (generally) the landlord will take of it.

In my mind, that wasn't my money to keep and with no move in checklist to go off of it wouldn't have been right to charge them for things that could have been preexisting when they moved in. 

Did you happen to provide him with a list of preexisting damages before you collected the deposit? 

A pre-existing home is a great way to leverage yourself into more deals.

You're trying to avoid "SEC solicitation rules"--which is easy--just don't generally solicit anyone you don't already have a pre-existing relationship with.

I am reasonably certain that all of these LLCs were created specifically for holding rental properties, but I have no idea how to check that they are in good standing with the state, that there are no current legal issues, and that I would not be purchasing pre-existing company problems.Does anyone have any advice on this? 

True dat.If you're soliciting people that you have a "substantive pre-existing relationship" with then you're exempt as long as you follow the rules (Fed and State) that govern that exemption.The general solicitation rules have relaxed some with the new(ish) 506(c) but you must make sure the people you're soliciting under that rule are accredited.As Bill said, all's fair if the lender solicits you. :-)

As you probably know you can offer your deals under this Rule to those investors whereby you have created a preexisting relationship.