I realized that I am severely hampered by not knowing all of the real estate and business terminology because I was lost on a lot of concepts.

Go with the larger security deposit BUT make a standard process to do it so you can apply the same concept to all potential renters in the future so you don't end up being on the wrong end of a discrimination suit.

All states have the concept of courts of equity, fairness and it may be a matter of another suit aside from foreclosure, or a borrower can take a non-judicial process to a judicial process by suit.

im looking for some recommendations and if possible a reference in houston area . i need to make contact whit a RE lawyer . i like to have some one who knows the laws making sure everything is correct especially now that im just staring ,i understand the concept and i been educating my self the most i can .but still .I know i will make some mistakes some times ,but I want to make sure i minimize them!!

The positives outweigh the negatives..

It's such a strange concept and certainly not a tried and true proven model that I condone.  

With purchasing my house only a year ago would it have a negative effect from the banks point of view?

If we find anything that has a major negative impact on our bottom line number we may go back to the owner and negotiate a lower price.  

Nothing is carried over into future years unless your taxable income goes into the negative due to the loss (can't have negative taxable income). 

Statistically, the city has low rates of crime for a city of that size within the 'rust belt', average income and unemployment figures, relatively low rental vacancies, and, most importantly, SFRs at less than 30k which, based on my understanding of the area, do not follow the popular negative sentiment on homes at this price point.