I've read/heard it somewhere that you should just refer to it as an additional deposit so that you can use the funds for non-pet related matters if the issue comes up and the normal deposit funds have been depleted. 

He even made a solid friendship with one of his tenants, who now handles some of the property managment for him.These neighborhoods are perfect if you want a vibrant urban lifestyle while also reaping strong rental returns.

@Joey Samudio, I'd recommend buying the asset with a normal 1031 exchange and then layer on debt for rehab after purchase.

The problem is, economic contractions (recessions) are a normal market of a free market economy.

Overall, I'd say this is a fairly normal deal.

Cash flow works on an inverse with risk, somewhere in the middle is normally the best place to start.  

Tell him there is a termination fee, but you'll waive it if he shows a copy of the death certificate.That's what I would normally do, but it depends on how long he's been a tenant, how good he was, and other factors.

California requires an $800 for LLC's that are doing business in California.California law suggests that managing members of an LLC that are a resident of California are considered to be doing business in California.Normally people will suggest opening up the LLC in the state where you are doing business(Normally the state where the property is located at).Others will suggest opening the LLC in a different state such as Wyoming, Nevada or Delaware for charging order protection, business friendly case law, anonymity, etc

Asking for POF (lender pre-approval, bank statement, line of credit etc) for a property like you have is perfectly normal. 

Conventional, FHA, and USDA all have products with very low downpayment options and government-subsidized rates for first time homebuyers who have a normal income.