Hi, I had a tenant who recently moved out at the end of their lease and upon final walk through, we discovered that the townhouse has been completely destroyed beyond what the security deposit will cover.

Well you can own a little more than 50% of the property up to the tax free limit, around 32000k euro after that we are taxed 1.2% roughly).I am not sure what type of property you bought or what your net return is (e.g. after VVE and land tax etc), but 1000 extra tax per year would destroy 3-4 months of monthly passive income for me. 

@Seth Larson can you imagine a scenario where the tenant refuses to pay anything, destroys the place, and essentially becomes a protected squatter?

I'd ask some more questions with that 500 credit score, that's pretty low but have known people had their credit destroyed by identity theft so worth asking about. 

If you're ever in a pickle, it could potentially destroy your investment trying to straighten things out.You're young.

If a pet destroys the carpet, that $250 deposit you have won't mean much to you.

Even worse, they have possession of the property and could destroy it on you.

Many of my homes are in HOA’s where you couldn’t replace a home with a smaller/cheaper home if you didn’t get enough money to replace the exact house that was destroyed.

It's ok, I'm not complaining,  I dont want to force him into something he isnt comfortable with and destroy a friendship. 

The sun will destroy any roofing product long before rain and snow.