Also, i would think that even if it is in the lease that we "forfeit our security deposit" this goes against what is considered a lawful application of the security deposit in the state of Ohio. if there was an "early termination fee" that could have been DEDUCTED from the security deposit then thats different.

Then develope an exit plan to limit your loss.

I have a pretty good system of letting interested applicants that I've had a quick phone screen with use a lockbox to take a peek at the home to make sure it fits their needs, and I then email them an application. 

I personally reject any applicant offering up front payment without bothering to screen them at all.

I am not in favor of limiting bank’s abilities to create money in the least.

Yes, I did the math on closing costs, agent costs, and any taxes applicable.

San Diego Housing Commission also has procedures and timeline on when notice of increase to tenant and then application to SDHC for request for increase. 

Which tends to limit your buyer pool.  

My question though, is how do these investors "value" the lien and set a limit on how high they are willing to bid?

But, when investing with two people, it is better to do that via limited liability entity with an operating agreement so that it clearly is written what happens when someone wants out and stuff. 2) Looks Like your LLC is pretty straightforward, so you can actually do it yourself or via lease zoom, and it can always be revised once you have few properties and get more complicated with other members.