Third, let's think about how to prevent problems like this when working with contractors and when the cards are in your favor and allow you to dictate terms of the engagement - this may or may not apply to the current situation, depending on the financial pain you are feeling and pressure to finish the job.

Thanks everyone and I am eager to engage with everyone and their recommendations!

@Mary Jay Based on what you've said, it sounds like you are 100% in the right to keep the deposit, and you have little to worry about.Do the following: follow the local/state law on the process, document all the damages with photos, send tenant a professionally-worded and formatted itemized list of damages with photos of the damages, and with an itemized list of the associated costs, deduct those items from the deposit and--if they exceed deposit amount--keep the full deposit, and lastly--don't engage with the tenant any more after you've done that and anything else your local laws require you to do). 

If you want to have passive partners, then you will need to engage an SEC attorney to create a PPM.Given the hurdles and challenges of finding equity the right equity partner, I'd probably look towards getting debt first. 

Petitioner testified that she was trying to build a brand by creating a website and participating in speaking engagements, precisely to solicit potential clients.

The service needed to be engaged in your name for tax purposes and the fact that the tenant paid for it at the time of service is problematic. 

An appraiser that YOU ENGAGE (not the lender) and/or a Real Estate Broker can give you a detail valuation. 

Read every book that you can, engage in the forums, watch youtube videos, practice analyzing deals, and get to a point where you feel comfortable communicating with other investors. 

Although engaging other investors, realtors, and wholesalers work, make sure that you are a priority to them!

@Ryan Mulder, you may consider engaging with a great, professional property manager who represents your interest.