The new measure would eliminate this exemption and extend regular rent control laws to all multi-family properties. 

The previous owners want to make the veteran sign a new lease that includes paying them their $200/month OR want to keep the security deposits to account for this Any advice? 

The previous owners want to make the veteran sign a new lease that includes paying them their $200/month OR want to keep the security deposits to account for this Any advice?

That way he has a secured investment and you can move forward with the deal (it sounds like a fix and flip?)

The income is also subject to self employment tax which is both halves of medicare and social security.

Hopefully you have a security deposit as well.

They may require you to get a new tenant before closing (have a signed lease and security deposit). 

I would consider putting a cheap wifi security cam inside the front door to get notified of motion. 

I put all of their names on 1 lease, though give them the option to pay their portion separately, always take 1.5 months security because college students love banging counter tops, throwing beer bottles, and tossing each other into walls after 2 shots of gin.Students typically get their refund check end Sept-ish, I give them an option to pay Fall semester Sept-Dec (4 months) and spring semester Jan- May (5 Months)  up front, with no discount. 

I am finally spending regular time on pursuing the goal of owning revenue generating properties.