We have an additional million dollars for about $200 per year and that covers our flip houses, etc (protection against being sued). 

In addition to SFR's, they have an inventory of condos right now that seem interesting.

Don't think roof or furnace exclusively, think appliances walking away in the night as well. 

Currently kitchen, laundry and downstairs bathrooms have linoleum floors, except master bath and walk in closet has carpet. 

I also require they get renter's insurance with a minimum of liability amount of $200,000 and I am listed as an additional insured.

HELOC can free up the additional 10-15%, but comes with a price (fees, higher rate, higher risk).It may take a while to save another down payment on annual positive cash flow from 1 property, depending on your numbers.  

If I understand the little I have read about the process, this is how it works:A regular lease is signed, just as for any rental, and in addition to that, a purchase option.

We meet at an active investment property and walk everyone in attendance through the details of the particular deal; so it's been a great way to get more 'hands-on' knowledge from active, successful investors.

So at the time that I'm authoring this post I'm still in the assignment contract even though there is not one currently active with the owner of the house.So my question is, at this point could I walk away from this deal and get my full deposit back?

The attorney won't walk you step by step through the process like an agent would but the contract you sign with the FSBO can be structured the way you want it with an attorney.