Now, I'm imaging a scenario when every one of these tenants move out that I'll be paying their entire security deposit + interest even if there are damages beyond normal wear and tear. 

Be mindful that there are rules that the lenders want you to check off.Furthermore, there are other rules on the tax side where you want to normally be under to get the most tax benefits.The magic number in both instances is '14 days'Lenders want you to stay atleast 14 days to meet the secondary home requirement.The tax accountant normally wants you to stay less than 14 days or 10% of the days it was used as a rental to treat it as a rental and not as a personal residence.Best of luck!

For example, if one is looking to buy in PA but lives in NJ, is the typical process to inquire with banks local to the property in PA or is it normal for NJ banks to approve out-of-state?

I have been using a deal analyzer spreadsheet that I found some time ago and that has served me well for analyzing "normal" deals with a downpayment and lender financing. 

So, basically you are using the $500k in crypto to secure what would normally be your 20-25% down payment in a normal financed deal.

Normally you are responsible for the portion of the year you own the house, and the previous owner is responsible for the time they owned it.

Both options have pros and cons, and the right choice depends on your lifestyle, experience, and long-term goals.

Normally, I don’t pull permits because it takes too long for the numbers to work, but I’ve heard enforcement in Coronado is especially strict.Has anyone dealt with this before?

Totally random but I know you can normally get a nice discount on your hazard insurance if you're within a certain distance of a Fire Station @Ray Ebert

Just keep in mind the MIP doesn't come off the loan like normal PMI at 25% equity.