Welcome @David Bilbey bp is a great place to feed your appetite for knowledge with a ton of great people sharing their experiences.  

Before going scorched earth on them try working out a solution, especially if they are good paying tenants.Do you have anything in your lease about excessive noise?

I do normally factor in about 20% of rent right off the top for vacancy + repairs + capex, I guess my question was more at what point should I stop saving excess income for future repairs and capex costs, and start putting it into more properties or investments?

I don't know that much about lease-purchase mortgages, but my understanding is that they are typically written for an option period of three years or less, giving the buyer time to get his finances in order and purchase the home outright at the end of the option period. 20 years seems very excessive to me.

Helmut:I assure you, I do not use the so called 1%, 2%, etc rules of thumb when analyzing a property ... nor do I put excessive credence in GRM, CAP, CoC or any of the single point-in-time ratios in isolation.  

Please also verify the accuracy of this information at the time you are considering these options as guidelines change.price Decorating allowancesRepair allowancesMoving costsNote—a dollar for dollar sales price reduction is also required for - Excess rent credit and gift funds not meeting FHA requirements Contributions exceeding the actual cost of prepaid expenses, discount points and other financing concessions Credit Requirements Required is 600.

GeoVera also does not require a four point inspection but they tend to have higher deductibles and is an excess lines (looser regulation) product.

An entire month's rent seems excessive.

Seller and Assignor will hold harmless buyer for withdrawal from contract to purchase based on any excessive damage caused by tenants causing a significant change in condition of property at time of final walk thru." 

Another factor is by the time you do eventually get the tenants out the damage can be even more excessive then when you purchased.This is a risk with short sales as well which is why if it is tenant occupied banks will discount the price some.