Regarding security with buying the property, I can't say I'm too worried about that.

You will receive the security deposit in Checking but then transfer it to Savings.Savings: Hold the deposit here so it's separate from operating funds.

Most S8 tenants have a history of bad decisions and from all that, many have only learned how to game the system.We embrace S8 applicants, but screen them just like any other applicant.Many have an entitlement mentality and try to leverage their S8 voucher and pretend to be helpless:1) A percentage won't apply because they expect a landlord to waive application fees for them.2) Many cry broke and expect a landlord NOT to charge them a security deposit.3) Many of those same S8 tenants trying to avoid paying a security deposit, won't make an effort to call the list of nonprofits we send them that will pay their security deposit if they apply.4) A lot of them try to avoid paying for utilities.

Imagine closing on a vacation rental that can't secure a permit?

You are going to blow a lot of money for a false sense of security that a good insurance policy can protect you from and save you thousandsThe LLc is the most overused and money waster used on single family rentals.

For the security deposits - since we will take over is the seller required to transfer those funds to us?

It could be helpful to have a real estate attorney look over these agreements for added security. 

Most investors  who pursue alternative lenders aren't able secure bank financing because they  lack the creditworthiness, experience or the deal doesn't pencil.

Why don't the banks simply charge a higher interest rate to secure the business and cover themselves?

Consider all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.5.