I think the *unreasonable* position is to expect that everyone is/can be equally good with money and financial issues, and those that aren't well that's tough **** for them.

Ants, spiders, flys, and other ordinary pests are often brought in by tenant behavior, so it's reasonable to expect them to handle with removal.Bed bugs are 100% the tenant's fault because they do not travel from home to home on their own; they have to be brought in.

I would start by setting expectations that you will likely not be able to net as much as you would if the property were vacant and turnkey. 

You can expect a 4% cash on cash return since you are new and probably are not going to jump to the front of the line and get the best deals.  4% of $150,000 is is $6,000 annually. 

I believe they expect us to rollover and let our insurance company handle it and just settle.

My question is what guarantees should I expect before paying? 

It depends on what you are looking for from the investment and what your expectations are which I didn't see above.

If we buy this loan, we need to have a thorough game plan on how we are going to be resolving this and understanding these dynamics is key to managing expectations and protecting investments.Sounds like a deal more for someone that buys partial inheritance estates and spends years piecing it together than a note investor.  

I don't consider someone always late but doesn't damage the house a good tenant; I expect the house to be undamaged PLUS the rent is always paid on time.

@Erich OertelRecommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.If you buy/renovate a Class A property in Class D area, what quality of tenant will you get?