Essentially a modified brrr using heloc as DP.

I believe security deposit falls under the terms of their existing lease which does not get modified simply because you buy the place.3) Yes, unless they are in violation of their existing lease.4) I'm not sure.

Then I will modify my statement.

It is a basic contract, but you can use it and modify it for your own use.Hope this helps . . .You'll find it under Landlording Forms: Blank Rental Agreement.doc

Just make sure it is basically a LTR lease modified and not a STR agreement modified.

Obviously all the verbiage in the lease about the first of the month needs to be modified with an addendum for this different pay structure.  

I do a variation on the noted method, but modified for my personal risk tolerance and investment goals...And in the same way that I would inherently modify the so-called 'HELOC method' as well.

You can modify them to meet your needs.We use month-to-month (MTM) rental agreements and prefer to collect the rent monthly, so if there is a need to change the terms of the rental agreement or to remove a tenant, it is easier to do so.

These laws modify any Landlord/Tenant law obligations and create additional obligations and concerns.

Worst case, once a year you call your borrower and get verification, or have to be proactive and help them find affordable insurance.2) The borrower stops paying.Solution: a) Modify the note, perhaps add time to the note and lessen the payment.