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Is this a secure strategy for decreasing vacancies?

I have heard several different takes on this so I want to throw it out there. 

Throw in a few shotty carpenters that ran off halfway through a job, and a stop work order from the city because I didn’t pull permits (lesson learned), and that’s really just the beginning.

It also helps should you want to secure financing from that bank in the future.  3. 

It has worked out extremely well with unbelievable returns in the 30-40% return rates not including the equity appreciation of now having secure long term tenants paying huge lease rates.

However, it also depends what exactly those expenses are, e.g. unnecessary payroll would be something you should be able to correct (and if you lower it, you increase the value of the Facility); high flood insurance or excessive property taxes are what they are and typically cannot be reduced, very well throwing off the "industry standard".Typically we recommend buying a Facility as it is currently performing (past 12 months) and use a pro forma only for where you can realistically take it. 

Is it legal to put a tenant's (or multiple tenants') security deposit into a savings account and then collect the interest that the deposit makes for you?

Is this violating any sort of securities laws?

In doing this, their money is secured by both a hard asset and a personal guarantee.