They use the property to secure the loan and when they give you all the money upfront (but the value of the property is the same when purchased) there is a lot of unnecessary exposure to risk.

Baby Boomers are a massive generation and Social Security helps pay rent for a lot of them, in some ways it's a version of Section 8 housing but obviously with different tenants. 

If not, make sure you get copies of the rental agreements from the landlord and the security deposits. 

This is one way to secure the price and funding for the project by the owner. 

Where Do you end up putting the security deposit?

It sounds like your primary goal is financial security during this transitional period.

From your story I gather:first, you secured financing through an FHA loan with a 203K included (where you planning on living there for one year to meet the fha requirements?

Our first property was under-rented by $200/mo, with no written lease agreements, no security deposits and no pet fees.

I anticipate on getting a FHA loan to secure financing. 

I want the inspector to have the time with their client without my opinions or bias (That's why they are paying the inspector) If they see anything that looks alarming or something they feel we may need to go back with, I ask them to grab me so that I have a reference point for later.