You can also use hard money or private money if you have people who trust you enough to loan to you.

In my state, I could keep their security deposit with no problem, I could probably also win a law suit against them but collecting is another matter. 

Question: Do I have to return the security deposit back to this Tenant ?

Private message me and les connect further.

You can use a private lender to purchase a distressed property, renovate it, rent it out and then pull 75% of the appraised value out during a refinance.

Doesn't seem to be an issue if providing personal guarantee and/or secured by property. 

You can use a VA loan to secure the property since it’s your primary residence.

How much is an acceptable percentage for a ROI in 6 months on private money?  

.-- Look for opportunities to recapitalize, either by raising private money (unlikely this early on) or "collateral assignment" loans to borrow at, maybe 7.5% while re-lending at 15%.-- I keep doing this until I go from $60 a month to $830 a month, which would take 28 investments assuming they were all $5k notes yielding net 7.5%.

As far as the seller wanting rent, that could be them getting the security deposit back if that is not detailed in the contract.