I'm brainstorming ways that I can most effectively use this empty space... 

Then lastly, a notice of foreclosure.During this time, the mortgage is continued to be paid and there is no damage to credit.We will then deed the property back to the seller/borrower and show this to the lender. 

This scenario is extremely common and while I exaggerated numbers for effect, I have had this conversation with clients and their CPAs and the client is usually surprised when you put the numbers on paper. 

So in effect, yes, you have to deal with it.

And very little after effects.....You can thank me later

Also how much pet damage insurance I should ask them to carry or do I just need to make sure their renter's insurance covers pet damages?

If there are any concerns with the property that are suspected to be causing a safety issue or potential damage to the property you can enter without notice.

@Atul Mohlajee not sure who your attorney is, but three of our attorneys approved our automatically renewing lease that requires tenant to give proper Notice so it does NOT auto-renewal.Michigan law also allows any length of Notice requirement, ours is 60 days.That aside, a judge can rule however they want, forcing the losing side to go through an expensive appeal process.Regarding the 1.5 SD, they are legally allowed to deduct any damages, then apply the rest to outstanding rent.My opinion is that the PMC should only be able to charge:1) Rent + lease utilities until a replacement tenant is found (Michigan statute)2) Whatever the lease contract states

We do not replace cabinets or vanities without charging the tenant for the damages they caused.   

They would still be responsible for repairing any damage above normal wear and tear.