Many mortgage companies require a wood destroying insect (WDI) report, so it’s odd that the realtor doesn’t understand that.

That's a recipe for a destroyed house and vacancy by eviction.But that's just me.    

Example: if the wind blows over a tree and it smashes a hole in the roof, and rain water floods in and destroys the flooring, that should absolutely be covered.

Would I spend all my profit on repairs and fixes after they destroy the home?

There is a well document syndrome in the medical journals  called  " Burnt out landlord Syndrome"  :) and believe me its real.there is no doubt a personality type that does best at being a landlord.. and it really depends also to some extent on the asset class.but on the high end stuff when I had rentals I had 14 SFRs that were new construction that I held all 200 to 250k homes.. and those tenants while fully qualified and never missed rent and did not destroy the house's.. they were on the other end.IE I want to up grade my appliances to stainless.. or can you please replace the tile counter tops which were standard in the day with slab granite..

Example 1: Home was located In a forest fire burn zone where the home was destroyed.

Day after closing, my team started demo, and we discovered extensive termite and wood rot damage that wasn’t disclosed in the sellers disclosure and wasn’t discovered during our inspections.The seller lived at the property 15 years and did several projects which included replacing sub flooring that had been destroyed by termites.

Think about it - bathroom is more expansive then roof, to get premium money are spend on finish & finish is what´s gets destroyed by occupants ...

Worst case, he ends up in jail and your unit is destroyed

But the tenants and their pets really can't destroy it.