This can work out for you but your risk is in buying the correct property with good mechanicals and modest deferred maintenance. 

This would be illegal where I'm from and if the deal didn't work out and it went to court you'd be paying the $ back plus interest and court fees.They only owe you the security up front... and the rent on the 1st day of possession.

You could also be passive in a deal, but maybe work out an agreement where the general partners could involve you in their communications through emails or calls.

For example, my city actually requires a permit for a shed (and a bleeping concrete pad...)Personally, I would try to work out the last option, he's a good tenant, is improving the property, not trashing it, and if you can get both control of work scope approvals, and free improvements, it could be a win-win.  

and will reply to your offer letter by either calling you or signing the actual offer and returning it back to you ready to move forward.That's how I find the "motivated sellers" ready to deal.Then, once I received hundreds of these offers back, I then examine the property specifics and work out the numbers to see if the deal is good or not based on the numbers.Also, your offer letter will state exactly how much you're willing to offer to the owner so you are already in a position to make money should they respond...and some of them will. 

I’m sure there is a way to make that work out!!

It may work out, but I feel like more often than not your buyer would go over budget, and your business would suffer from selling bad leads.

You need to work out the closing cost, selling fee, escrow cost of your current home see how much of that $20K equity is left.

I should use this to test my discipline, it will work out way better in the long run.

How did this work out for you?