Be wary of hard money loans; they can be pricey, often around 12% interest for newer, which can quickly eat into your profits and also require a high down payment.

I would require renters insurance and make it easy for them to purchase providing online options and suggestions to add to their car insurance, etc.

What documents do they require, what credit scores do they allow, how do they verify previous rental history, etc.?

Your ineptitude may amplify your losses:(You're also jumping to assumptions.We've had out-of-the-county investors that we could NOT legally send funds to because they hadn't supplied us with the IRS required documents - and they didn't respond to our numerous communications to get them.Once we obtained the proper documents, we sent them their funds - by the way, we did send monthly Owner Statements, so they had the info to see what was going on with their portfolio.So, that brings up another question - what information have they been sending you and when have they been communicating?

What if you require more rehab $'s than originally estimated?

Our property doesn't meet the zoning requirements, so the decision has been made for us. 

All those things require maintenance. 

In addition to this what else can I do to protect myself and ensure that they don't take anything more than is required from that security deposit?

Your answer would be it depends on a million things.Like the specific property, its condition, location to desirable areas, local STR regulations etc.We would need much more detail to be able to help.

If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee.