The area is zoned for a max 4/5 stories with 15 units total, 12 of which are market rate.Construction financing is secured as I have a relationship with a hard money lender who is interested in financing the project, but would need to assume the property next door to move forward with a construction loan.

But using a year lease will secure the income, or your right thereto at least, for an entire year.

As someone with limited capital who is looking for a MFR for his/her first purchase, I don't really see how this financing option could be a bad thing; especially if, like me, your focus is on cash flow.If I pick up a MFR on a 5/1 or even 10/1 VA loan, recycle the profits to bulk up reserves and equity then I'm paying less to make my property a more secure investment.

I was wondering if by law I am allowed to take what they owe me from their security deposit.

Tip: Only accept a money order or cashier's check from the applicant for first month's rent and security deposit.

And they also must pay 1 months rent for securing new tenants (half goes to the agent that brings the renter on the MLS). 

I do not see the bank loaning you the money without a security interest being filed on the property (mortgage). 

She secured an agreement to advertise the property at $580,000 for 30 days and got it out to her list. 

It is hard for someone who has a voucher and they only have so much time to secure a lease before it is revoked.It's a very unsettling experience for someone who knows if they don't use the voucher they could end up homeless.

We do use a property manager for some that are too far right now for us to deal with, but they take almost as much time and effort as the ones that I self-manage, so I'll take those over when I have the time to build the proper systems there and have time to screen the tenants myself.If I found secure investments that could substitute for the income from our rentals without the hassle of dealing with tenants, I would consider it, but it's difficult in this low-rate environment.