We can't even collect last month or security deposit.We are the only province in Canada where a security deposit is illegal.

So, a $20 EM deposit on a 400K house is as valuable as an unlicensed broker: worthless.

If the tenant is gone, and you're thinking about keeping the security deposit to fix the damages be an honest landlord and give the tenant receipts on what you spent their deposit on...

Then, call it $4k security deposit, $3k furniture, $8k left for operating expenses, vacancy, etc. 

IMO both parties should be required to put up a deposit, and if either bails then the other party keeps the deposit as damages.There is a ton of work that goes into securing a property as a buyer

There are other loan products around that only require 5-10% deposit (but, higher interest?)

But when i get the contract do i have to make a legitimate offer on the house  and pay that amount first before i sell it or do i just get give the seller a small deposit so i can sell it to my buyer ( I intend to sell my contract)?

I have two accounts which each get deposits from several properties each.  

Did they meet you in a U-Haul truckAlways go to their home - look at how they live - check their drivers lic, make sure it is the same address as where they liveCheck the SDAT to make sure the landlord is really their landlord - sometimes bad tenants will give false references.Always check with landlords other than their last one.Frst months rent and security deposit must be cash do not accept checks or money orders.

You bring up good points and the DTI question you have depends on how much income you personally bring to the table along with the net rental income from all your rental properties.When you leave your current home to the new home you could always obtain a lease agreement + a copy of the security deposit in order to use 75% of the gross rental income against your monthly mortgage payment.This will help you qualify when you convert the investment property into a primary occupant home (refi cash out).In order to refinance at market value you'll want to have atleast 6 months of title seasoning since you bought your investment property.