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.

Now they want their deposit back.  

-----------------------TERMSFOR VALUE RECEIVED, the Borrower promises to pay to the order of Lender, at its principal office located at ________ or at such other place that is designated in writing by the holder hereof, the principal sum of XXX Dollars ($XXX), together with all charges and interest herein provided, payable at the rate and in the manner hereinafter set forth:Borrower shall make the payments of principal and interest at the rate of TWELVE PERCENT(12%) per annum based upon a twelve (12) month term with the period starting from the day the amount borrowers has been deposited into the Borrower's bank account estimated to be on 2/20/17 and the term will end 6 months after on 7/20/17.

He obviously wants to retaliate because hes not getting his deposit back.

In the state of Pennsylvania, a landlord is required to have a tenant's security deposit placed in an escrow account.