The water was liens le but the security deposit was no due back for 45 days.

I just put 5000 to be conservative but owner states he just put in new hot water heaters, roof is in good condition, the pics of the yard look like it is really well maintained, etc  The detached garage looks old but has a brand new roof on it and has been painted to match the apartment building. 

That's how they can afford  to pay interest on deposits (as sad as the rates are). 

I did not accept security deposit or first months rent and told the tenant I will terminate the lease.

I want the property not a pissing match but if they won't play ball I wouldn't mind shoving their ball where the sun don't shine ;)

We get a copy of their driver's license and a $20 cash deposit.  

To move in, you will need the first month's rent plus a security deposit equal to 1.5 month's rent.Do you have that available now?

For instance, I'm trying to keep my monthly PITI to around $600, But I want to make sure that I buy into an area that I can rent out the property for near double, the price tat I have in it per month ( $1200 a month average rent )I've done a bit of research, and here are a few zip codes that seem to match the criteria...... 38117 , 38133, 38135, 38018 ,38016 and maybe even 38119Any advice or insight is much appreciated.

They sent their own cancellation notice saying they will allow us to cancel if they can keep the $2000 deposit. 

The banker will say they appreciate having all people, and yes, its nice you have deposits.