My first roommate moved in 2 months ago and I have been collecting deposit, rent, and utilities through PayPal because we both have it (we work for the same company).

It is complete with all of the time frames for documentation, inspections, and deposits and stuff, which is nice, but lots of boilerplate as well.

I have a 2 unit under contract, the current owner told me tonight that the current tenants are month to month, but never signed a lease or gave security deposits.

The current tenants did pay her a Security Deposit of $600 and last month's rent of $600.  

Do I draft up a sub-lease and have them have a security deposit and what not just like any other rentals?

https://www.biggerpockets.com/forums/12-starting-o...To reiterate what I wrote there:- "As long as you've accumulated sufficient equity, and your DTI ratio is fine with your Lender, using HELOCs as deposits (and starting new mortgages for the rest) is probably the best/easiest way to keep buying real estate - using NONE of your own money!

If they say they don't have money for a new place, ask how much the first month's rent and deposit will be and if its reasonable, offer to pay it for them.

This renter doesnt have the first months rent, but signed the contract and paid deposit.2.  

I make sure I know when they are supposed to have appraisal and title done and then stay on top of contract date which usually has the rest of deposit and loan commitment date.

The funds are directly deposited with the title company or attorney for the purchase, rehab and construction.