An "A" would generally be new construction, with newer amenities and finishes (security, granite, well lit, open floor concept, etc.)Likewise, an "A" neighborhood would tend to be an area with newer properties, a top-rated school district, high-wage earners, etc.

The total indebtedness secured by the residence (including the Line) cannot exceed 80% of the fmv of the home.

He says that since the apartment is not legal, the lease is null and void so we have no grounds to demand rent or evict him.We also have no security deposit.

There are definitely a few benefits to keeping them separate, and potentially legal implications depending on where you invest:Opening a separate account for security deposits will ensure that there's no chance of them being spent - this is the one that might be legally required as well.Keeping a separate "operating account", even if you're not a business, can absolutely help you keep the two sides of your finances apart and more accurately track income vs. expenses and the reserve level that you have for the properties.Theoretically, if you're using a very detailed budgeting/outflow tracking application or scheme, you could make the operating account unnecessary...but it's a very small action that will help you simplify things greatly, especially around tax time.

This sounds like you may have been scammed by someone renting out someone else's unit. they take the first months rent and security deposit and run before they get caught. you may want to go down to the courthouse (or online depending on your county) and find out who the owner is and contact them if you are unable to reach the PM or whoever rented you the unit.

But there are three issues, Support beam is not secured to footing or beam.  

My plan is to get the deal under contract and secure the financing during the due diligence period.If anyone has other advice, or critique for mine, I would love to hear it as well.Mark Spivey

The property is the only security for the loan.  

How and when does the security deposit get handled?

They have onsite security/front desk and have a feeling very similar to living in a residence.