The paragraph you will insert into the promissory note will read as follows: "Maker of the note has the ability in the future to recollateralize this note to a different property just so the equity in that property and the cashflow in the substitute property has equity and cashflow to support the outstanding principal balance and the monthly payment." 

In that case, you just mail them a detailed invoice maybe with pictures containing the damages (take detailed notes and photos) or cleaning costs that were deducted and remaining deposit balance if any.

I'm in the business to make money, but I also try to balance protecting the underlying asset so that it keeps its value.

The key is when things go out of balance.

The risk & return is not balanced.

Even if you had that amount in cash, you could easily lend it out at 10-12% to other investors and use the income stream to pay down the principal balances.

Run the numbers for what the average home is sold for, subtract expenses of handling the property and outstanding loan balance use that number to calculate what % you can feasibly work with.

Does everything need to show up on the balance sheet?

If you've built up a decent balance in your 401k, have you considered taking a loan from it as a down payment?  

To qualify for a commercial mortgage, lenders will typically require all the signatories' combined net worth to be equal or greater than the balance of the loan, with 10% of that in cash.