The property is the only security for the loan.  

How and when does the security deposit get handled?

They have onsite security/front desk and have a feeling very similar to living in a residence.

You sign a promissory note promising to pay seller at terms negotiated and give the seller a mortgage on the property to secure your promise to pay the note.

What if we went through a private money lender and just had to make a security deposit for the loan and adjust the term of years? 

What are the steps to making this as easy and secure as possible? 

Keep in mind, it's s security deposit, not the rent for the last month of the lease.

Bottom line is it's better to cut your losses and move on.You can deduct the cost for pest control from the security deposit because that is clearly damage caused by the tenant.

They did not respond so it appears they are another game player.

I kind of doubt they will be unable to secure insurance or financing, but it's definitely worth investigating the potential implications before laying cash on the table (or lock it in with a due diligence contingency for this matter).