Think of all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.5.

We secured hard money for the pre-approval; however, we'd be interested in comparing terms with other lenders over the next few days.

As far as I'm aware, I have to pay regular  income tax on the $ 500k.

Listening to that podcast regularly will give you a great grasp of what multi family investors around the country are experiencing. 

I assume you have a security deposit?

Yeah that makes sense on a larger property there are economies of scale so hiring security cost per unit wouldn't be as expensive. 

Is there a security deposit? 

There is a REIG group here that meets regularly.

We do have a secured solid wrought iron fence/gate to the alley, so the tenants are secure as long as they remember to lock the gate.I will go ahead and try to contact our council member and see if anything sticks there.

Your friend should send a demand letter for the return of his security deposit, or whatever portion of it he feels should be returned.