He is preparing a bid/proposal that I presume will show itemized costs for materials and labor.

Aside from having the option properly prepared, you'll only need an attorney or title company if and when the tenant exercises the option. 

Check in on "how's it going" and do thorough preparation and contact with each party.If you do a destination whole-house Air BnB, try to fit as many people as possible, and have two bathrooms.

Do hard money lenders need any special licence to lend in Montana?

I specialize in the San Fernando Valley and up into Santa Clarita.

I would HIGHLY encourage you to start with a SFR if that’s what you think you’re prepared for.

But it really does not matter how you aquire these assets if you do it yourself or buy through a company that specializes in flipping investment properties and may have in house management to keep everything under one roof.No company lives with the tenant 24 7.. and being that your investment security is 100% dependant on what that tenant does..

Im a local Realtor for the Nashville area who specializes with investors.

Anyways I’m fully and financially prepared to re-do the landscaping and make repairs to damages but how do I go about proving and using the deposit for this legally?

You can approach the tenants and ask to re-negotiate, but they do not have to, so you should be prepared to give something.