If they come through then the hold deposit is converted to Security Deposit but if they fall through then the Hold Deposit is forfeited, non-refundable.

Things like vacancy, collection losses due to non paying tenants, turnover repair costs and unaccounted for capital expenditures probably surprise many.

See if there's an easier way to hit your target.Unless you're banking on appreciation and amortization, this is a non-starter as an investment.So here's what I'd do. 

Otherwise they will take his car (unfortunately he bought it on installments), and they will put a lien on his place due to non-payment of prop tax.

Of course you use non traditional lenders at that point, so I was curious how fha worked specifically.  

If using a lender this is a non issue.

I've heard it's possible, though costly, to dig up and remove all of the bad dirt, and replace it with new clean dirt.

Since you noted you still have time you could also look into partnering with someone on non performing notes as well.

One concern I have is the tenant turn over process and how best to handle the inspection (security deposit), cleaning, keys management, and potential showings for new tenants.

Some of the Substantial services : Cleaning of the rental portion of a property while occupied Concierge services Guest tours and outingsMeals and entertainment Transportation Other hotel-like servicesI am not familiar with your situation, but make sure you are not paying SE taxes when you dont need too.