Obviously, lowering the fee and raising the rate is an option but that feels a little bit like spinning my wheels.At some point, if I'm dropping my rates far enough to compensate for a high cleaning fee, we get into the conversation of "is it even worth it to rent it at this rate and risk property damage, 4 star review, etc".

I'm guessing this is a shared house and she's renting a room in it.For her deposit, I'd only keep whatever expenses are related to clean up and damage.

Basically I want to know how much damage i did to myself for.....reasons. 

Anyway putting together a list of damage to file a claim if you have any advice please let me know. 

We think this will create more value than dressing up the existing small master bath and keeping the 4th bedroom.  

Also you need to figure out how you intend to cover inevitable property damage done by guests but there are plenty of solutions for that in the marketplace where guests pay a flat fee per reservation in lieu of a deposit and you get covered for an assortment of potential issues (bad checks, credit card chargebacks, fraud, personal property damage, etc.)  

He found out the carpet smelled so badly with the dog pee and wood floor was also damaged by the dogs after they moved out. 

Damage, excessive noise and $100 per head over max occupancy.

Security deposits are used for damages and are not designed to be applied to fees or rent. 

The lease agreement also states that they are responsible for any landscaping damage due to lack of watering or neglect.