If it was a normal pet deposit, you should receive it with the security deposit. 

Secure your property.

Normally you can use secured debt as a down payment however unsecured debt is usually not allowed. 

I made a sort of half-*** cash for keys deal where I would take her security deposit as the last month's rent as long as she moves out.

Be sure to run all this by your securities attorney and provide proper disclosure and documentation to investors.

When we did start looking, we initially wanted a multifamily for the obvious security in knowing if one tenant does not pay, there is still another to cover the mortgage.

They could have homes to sell and/or want to learn the area while gaining the confidence that the job is secure and they like the area ......So, the perfect option is to rent for a couple of years. 

Has anyone done or heard of this kind of security check?

I actually just used this same process to secure a HELOC with a local bank on another property as well to secure the funding to buy the house.

Something about it being a better rate because it's some kind of special FEMA package.