Well, we have the deposit to hold and we were to meet and do the walkthrough for the new tenant move in checklist today and finalize everything.

The LOI is non binding and does not require a deposit, asking for a deposit shows that the broker/seller is not trustworthy. 

IF they blow their security deposit on other things.

I like the idea of having a clause in the lease stating that option 2 will go into effect if a notice of potential citation is received, but am curious if the tenants would end up just falling behind on rent because they have already requested that this first fine be taken out of the deposit when they move, due to current financial hardship.

Now they've sent us a demand for their security deposit back.

Each turn means more wear and tear repairs (not reimbursable through security deposit) so factoring in higher repairs/turnover costs could be worthwhile.  

I'm currently in the process of creating the LLC for the Checkbook IRA and I have a former employer 401k with +/- $41k that I can withdraw and deposit into the IRA. 

This was expedited as I chose to do direct deposit/wire as opposed to a check.

If I wanted to buy in my desired areas I’d need a bigger deposit on top of the FHA loan limit, in which case I’d just go down the conventional loan path.

Tenant decides to move or can't get refinancing in the time period, owner would evict them, keep the deposit and repeat the process.