Regarding your deposit being at risk.

Now, the owners does not want to make good on the offer, and had offered a full deposit refund.

In my mind, this will make it difficult for me to make a case of keeping their initial deposit if the unit is trashed.My thoughts were to slightly increase rents 3% - 5% and have them complete a conditions report prior to renewing a 1-year lease.

If they do, that is an early sign that that person may not be the right tenant to occupy your property.Collect DepositsThe standard security deposit is usually equal to one month’s rent, but some states law allows property owners to collect up to two months’ rent for a security deposit.

So, he lied either to me or to the previous PM.He also told me he paid a $250 pet deposit when he moved in.

Drew Sygit - How do you know which unit each payment is for, when the tenants deposit it to your bank account? 

If she claims one is an ESA so she technically only has one pet, then you can tell her that the pet requires a $500 non-refundable deposit and an extra $100 a month for the pet.

MA law requires to save tenant deposit money at bank escrow account.

You shouldn't need the expense of a PM software until at least 10 units.Rent Collection - have tenants deposit directly to your bank or use Venmo, Zelle, etc.Leases - we created a great one in Word, added form fields and then locked it, so all we have to do is tab through 6 or 7 fields to add property address, tenant names, rent amount, SD amount, start & end dates and a few other fields.Contractors - don't recommend Craigslist as mostly flakes.

You mentioned good schools,so kids and only a 2bedroom don't match.