You could get your deposit back, you could lose your deposit, you could be sued for specific performance, you could be fined by the real estate board for brokering without a license, or you could go to jail for fraud. 

I keep my "story" going to get all the bank details from them so I have notified the branch at Educators Credit Union which is where they are telling me to deposit funds. 

E-mail a copy of any notices and finally your deposit settlement letter/ damage invoice to their caseworker. 

I use a rubber bands around my bills, then deposit them in my mattress for safe keeping.

If the contractor asks you for a 50% deposit (which you should argue against), that's entirely on you; your lender will not front that money.

I don't see why it would be a problem but playing devils advocate, maybe the rental manager would rather wait for a finished project to show rather than an undergoing project only because perhaps someone does not like the aesthetics of the bathroom (tiles, vanity, etc) after they've committed to the rental (security deposit, tenant screening, etc).  

Deposit into the Account of 100 Main Street, LLC.

Yes, you can likely back out and get your deposit back based on ANY inspection even a good one, but its disingenuous to operate that way. 

The second you advertise a contract people will throw their deposit money at you before they even look at the house.

They will look at the house after the deposit is paid.