There are a significant amount of risk involved in the whole process along with holding costs.

However, having researched the question I am under the impression that California law requires notification of any withholding of deposit within 21 days of leaving?

So wondering if I can withhold the balance of the SD until a new tenant is placed?

This is  pretty spot on,  Its also  safe to say that town  off the speedline like  Audobon, Collingswood  and all of the Haddons were  mostly built in the early  1900's  similar to Philadelphia so even with a  rehab  I would  higher the  cost of  repairs  withholdings  close  to  8 to 10% and  youll have  the majority with Knob and Tube!  

And make sure you withhold some money when the project is complete.

@Andrew R. the NRW 91-01: Withholding on Sale of Real Property by Nonresidents is a good link - I went to bookmark it and found I had already done so in 2012 :)My understanding is that it's "withholding" meaning the seller may get some or all of it back once s/he/they file a tax return in Rhode Island for that year.Also a close reading mentions a possible exemption for sellers 55+"In the event that the sale of the property by a nonresident will not be subject to tax under Sections 121 (One-Time Exclusion - Over 55 Principal Residents)... the nonresident seller must make the gain election and file the RI Form 71.3 Election even though no withholding need be made""If the property Martha was selling was her residence and if she otherwise qualified and intends to treat the sale under Section 121 of the Internal Revenue Code (one Time Exclusion Over 55 Principal Residence), she would still have to file the election form 20 days before the closing but would complete the election form and use the special types of transactions area on the back.

Before you even consider a trip to court (and I'm not sure why you'd consider this option at this point anyway) you need to be aware of your options as a tenant in your state in terms of what you can do if a landlord does not address repair issues to make a rental unit "habitable".You also need to be aware of just what limits a landlord must go to to achieve this.Colorado does allow a tenant the right to withhold rent IN SPECIFIC CIRCUMSTANCES if a rental unit is "uninhabitable". 

I have a tenant who is threatening to withhold next month's rent.  

You need to consider all the costs associated with holding a license.

Not sure what problems would turn up when it is time to record properties in your name.Regarding taxes, the income from the investment property will be subject to income tax and likely withholding as well.