The security deposit covered damages. 

Think of all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.5.

I mobile deposit when they pay me with a check.

If the place isn't clean, pay for professional cleaning and deduct it from the deposit (did you have a walk-through before they left?).

Not actual extra money out of my pocket,  but saying things like if they're out within two weeks, they get all of their deposit back (even if there was a couple hundred in cleaning and damages).  

We too had reservations about this process because the tenant could easily just back out and say they are not ready to purchase the house at the end of their lease so our lawyer put in the contract that the tenants would need to front $15,000 when signing the contract as a deposit on the house (which we put in an interest bearing account).

Also, if you are concerned, you can always ask a bit more for the deposit.

Would it perhaps make sense to you to form an LLC and have the funds deposited in the entity's operating/banking account.

Is there anyway that I can justify taking these damages out of their security deposit.

A well set Policy Packet should be part of the Lease.. in language... per Policy Packet.As well as addendum for Crime Free / Drug Free,  Lead Addendum, Pet, Security Deposit Agreement, move in condition check in sheet. to mention a few.