The contractor you choose should be able to do the restoration within the budget the insurance company comes up with. 

Mine says they'd have to restore it back the way it was. 

My family has a restoration company so they helped do a lot of the work.

They might charge you 50% more for "restoration cleaning" but much cheaper than new carpet. 

I refused because I am treating his wife's lease as a completely new one and processing it as a standard tenant move out/move in (ie. restoring property to previous move in condition) Am i doing the right thing?

We'd like to do the renovations ourselves so we can: learn how the guts of a house work to become better investorscapture more of the equity with our sweatpay for the project as we gosave money on material costs w/ CraigsList and Restore purchasesbecome more flexible, capable humansWe also think it would be fun.After 2 years, we will try to sell each unit individually as a condo.

How do I figure out what my property will be worth after updates when using the BRRRR method? I'm looking at my first property, a triplex for about $55K. I haven't toured it yet and not sure how much updating it would...

They might pay PART of their rent,  but the government pays the rest or owns the property.   

Occasionally for cheap rehabs we have also found stuff at Habitat Restore. 

My past rehabs were smaller buildings with extremely old appliances/finishes that I either donated to the H4H ReStore or allowed my subs to take for their own use.