I have selected one out of the three and want to proceed with lease signing and security deposit collection.

THEN had to pay the city to come out and reinspect whereby he noted the deck panels were not secured.

So, there is no established incoem stream at this time.In addition, the friend hasn't secured a job in town just yet so there is no income stream there either.

As a habit, I always did a public record search, takes about 10 minutes, to check for mtgs/liens before making an offer.

How do I handle the lease, the security deposit and any additional rents.

I've heard I could take a second mortgage on the property as security for myself? 

Terms of Consideration:In this mutual termination, both landlord and tenant agree to the disposition of deposits and financial responsibilities in the following manner: Landlord will return security deposit by June 6, 2018 less damages caused by tenants, missing items and outstanding utilities/water bills.We'll fill in the terms later but do you think this is good enough? 

It also gives you more credibility in the eyes of the public.

Primarily though, as I mentioned, I'm skeptical of the public/media backlash.

Do you guys keep security deposit in a separate bank account and if so what kind?