I am looking for a solution in which we can deposit checks from pictures of the checks.

Make sure you have copies of the leases and applications, and that you get the security deposits transferred over to you at closing, and the rents collected for the closing months should also be prorated and credited to you.  

I now live in Alabama where it seems the opportunities are endless.

(a 5.0% increase), from $Y per month to $Z per month, effective September 1, 2024.An additional $X deposit is also required to bring your security deposit equal to your new monthly rent.

Have the tenant use ACH or Zelle for deposits. 

You picked the wrong kind of property to start in as a 3/3.1 townhouse is not ideal for room hacking and is more residential in nature which is why you should sell it and take the proceeds and deposit money and look for a two-family where you and your brother can live in one side and you can full rent the other side - maybe even as a mid-term rental to 2x the rent.

So is forming an LLC and getting an EIN to set up a business checking account to receive the security deposit and collect rent payments a good idea?

My PM charges a pet fee that they keep, but they also guarantee if the pet causes damage (and the deposit doesn't cover it), that they will fix it. 

Flooring can be a basic vinyl or even a DIY job using peel & stick flooring.Expensive materials is more risk for the landlord because when they get damaged there is more likelihood you will lose money on the deal because collecting damages exceeding deposits if difficult.

Does the security deposit go to the new owners at closing, and does the tenant need to sign a new lease agreement?