So, there is no established incoem stream at this time.In addition, the friend hasn't secured a job in town just yet so there is no income stream there either.

I guess they knew of two but did not officially disclose them.

How do I handle the lease, the security deposit and any additional rents.

I've heard I could take a second mortgage on the property as security for myself? 

Terms of Consideration:In this mutual termination, both landlord and tenant agree to the disposition of deposits and financial responsibilities in the following manner: Landlord will return security deposit by June 6, 2018 less damages caused by tenants, missing items and outstanding utilities/water bills.We'll fill in the terms later but do you think this is good enough? 

Do you guys keep security deposit in a separate bank account and if so what kind?

Conventional Manufactured 80% LTV/HCLTV/CLTVFHA VA USDA Manufactured.When a manufactured home has an accessory unit (mother in law, granny unit, guest house, etc...) the accessory unit will disqualify the manufactured home for financing.When a manufactured home is the accessory unit it will disqualify the property (technically Fannie / Freddie will allow, but investors do not).Very important -Accessory units are ONLY allowed/accepted, when the property is officially a "single family" property.

Your only safeguard is the value of the property which is security for your investment.

Are there any security lights?

a simple e transfer gets them paid and being that it is a second job for them, their fee should be fairly cheap.If you have about 20k in cash on your own, i would look to secure another investor or solicit friends and family.