(2) The contract says that I need to pay a $2500 Earnest Money Deposit.  

6) I start sending our exclusive deals in advance of receiving the deposit due to how good we both felt on the call (My mistake).7) Investor "openly and honestly" questions our business model and wants to know how we make money.

@Albert Johnson easy--you retain the cost of fixing the problem out of the tenant's deposit, and send the tenant an itemized report showing exactly how much it cost to fix the problem (and abide by any other local laws/regs regarding deposit retentions and refunds).This is what the deposit is for!

The process was pretty straightforward as I didn't have to do much except setup an account with the local housing authority the tenant was with in order to setup my direct deposit. 

The rest is auto deposited every month from the govt 100% of the time without fail. 

I'm afraid you'd have a tough time selling the damages to a judge if the tenant was to question a deduction to their security deposit.

I think in VA if it's in question, I have to post notice that tenant must notify me in writing within 7 days if they intend to stay and if no response, I can assume it's abandoned and follow next procedures for turnover and security deposit. 

They had a lease signed and took a deposit.

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.

You'll need to know how you're finding tenants and doing the background check, what process you're using to collect deposits and rents and what you're using to create your lease agreement.