Sure if they have renters insurance they should file a claim, and you can see if you get lucky and they cover the entire cost  also keep in mind that you’ll probably have mold, so that needs to be remidiated by bleach or something else before new boards are installed  Otherwise, since they are a decent tenant, I’d try to negotiate and work out a compromise with them.

Then all your locks are compromised.

The actual value improvement is going to be determined by the referees if the previous owner disputes the value you give them and as a compromise can be determined with an updated appraisal when the owner redeems. 

I want strong rents and I am unwilling to compromise much.  

In my area they can rent out at 1,000-1,200 all day long, and since there's so much demand, I can screen tenants properly without having to compromise just to avoid vacancy.

You're correct that improperly drafted documents and noncompliance could compromise the asset protection benefits of the structure. 

Perhaps a compromise. 

This is pretty typical in value-add deals...not the strongest cash flow (sometimes none at all) in the first year and it ramps up from there.Funding capX out of cash flow is just a bad idea because the cash flow in the early years is already compromised due to the lower rents and if you don't have the money to do the improvements you never get out of the rut.There is another solution and that is to raise all the money in the beginning but don't call all of the capital at once. 

Most are priced too high to provide adequate cash flow so don't compromise, keep looking and one will present itself.

Everyone is happiest / most compromising at the beginning.