Hacks of OPM databases compromised 22.1 million people, federal authorities sayTwo major breaches last year of U.S. government databases holding personnel records and security-clearance files exposed sensitive information about at least 22.1 million people, including not only federal employees and contractors but their families and friends, U.S.

Is this a secure strategy for decreasing vacancies?

It also helps should you want to secure financing from that bank in the future.  3. 

It has worked out extremely well with unbelievable returns in the 30-40% return rates not including the equity appreciation of now having secure long term tenants paying huge lease rates.

Is it legal to put a tenant's (or multiple tenants') security deposit into a savings account and then collect the interest that the deposit makes for you?

Is this violating any sort of securities laws?

In doing this, their money is secured by both a hard asset and a personal guarantee. 

Think earnest money, rents before they are disbursed to the client (you) & tenant's security deposits.

Yes, the debt is what I am leaning towards simply because the property isn't so big that I need a partner to secure a loan.

In any event secure the HELOC now when it is available.