A complaint with HUD must be verified by an intake worker.

In CA, the state department first does an intake with someone who has filed a complaint to be sure their complaint is legit.  

Having the tenants do the application also seems to screen out the people who aren't very serious about moving in. Take

First the DFEH does an intake with the complainant to decide if the complaint meets the criteria for discrimination.  

You need to be able to handle the drop in take home pay or have the cash flow returns from the real estate investment high enough to cover the 401k loan payment, or some combination of the two.  

One last question, I see that a lot of people take a "hold deposit" then at move in take the rest, sign the lease and then give the keys but what if I want to require the renter to pay everything and sign the lease now and then give them the keys when they move in in August?

Please note that changing the AC filter and cleaning the AC air intake closet should be done once every 30 days as part of routine maintenance.The Air filter on the AC had not been changed since you first moved in (Dec 2015) and the new replacement you bought was not the right size.

I am conservative in taking that risk, partly because half the tenants I get complain about their old landlord jacking the rent every year. 

My thought is that I'll allow him to break the lease as long as I find a suitable tenant to replace him with and there is no loss of income. apparently he has someone who might be interested in taking over the lease. 

Also each state has it own laws pertains to alcohol intake, consider your state laws, person size and body weight.. hope that helps, just an opinion.