Once you have verified that they are paid in full by the previous tenant (or any of those tied to the property like water), and you have inspected the house, then you return the balance of the deposit.If you are moving into the house, you will need to set up utilities anyhow, but if they move out Oct 31, they start in your name Nov 1.For the inspection, take photos of any damages. 

Is there a different option that is cost effective and still achieve the same result as listing, tenant screening etc., A friend has suggested apartments.com.

LOL  I have never had any significant damage.

My prediction is even $4 gas has virtually no effect on anything regarding tourism.

May even have a negative effect. 

Understanding the rehab costs and how it will effect the calculations and THEN still putting in the offer(with the actual intent to purchase) is the hard part.

or can I effectively research homes online?

Note, even if insurance pays for all the damage your property suffers, you still lose.

The conversation between the agent and the owner could have happened before notice was given.From your post it sounds like the damage deposit is enough to cover the repairs. 

Repair Any Damage or Health and Safety Issues2.