For last three years I had good occupancy, now seeing a slowdown - not sure if it is a market shift or just normalizing from the Pandemic.

Security Deposit: 2600Lease states no smoking/painting walls/no hanging things on wallsTenants have moved out and have left two truck loads of garbage to be removed.Damaged doorPainted walls which got on the ceiling and trim Lots of holes on the walls throughout the houseDamage from windows being left open constantly Weed was clearly smoked in the house (smell throughout the place) so we need to deep cleanWater bill wasn't paid so I had to turn back on utilityMissing keyQuoted costs:$450 junk removal (some furniture)$935 for damaged doors/windows, painting cleaning$30 for utility turn onTenants were only there for a year before moving out so a lot of this is beyond normal wear and tear. 

Without a solid plan, fix & flips would be huge gamble.

What penalties are normal for this type of partnership?

Pay for your own painting and make them pay normal rent.

Then the person is soured on gambling on real estate and not around here to answer questions. 

No worries, it's all in the normal course of REI.

Normally your home owners or Blanket coverage would cover some of this.

If they are not paying rent then go through the eviction process as normal.

Normal wear and tear would be a few small nail holes for hanging artwork, a clock, etc.