The down side would be the same as any bank the buyer could end up not paying and you would have to foreclose on him and they could damage the property out of anger/spite.

The bank will require an additional inspection to assess any possible damage to the property.I have a client who is in escrow on a 4-plex.

IE lets say you fight this for the next year, get a judgement for $100k in damages, but if he/the llc doesn't have $100k in assets, good luck collecting - people can't pay you what they don't have.

I received a letter from my insurance company today stating that they had to cancel my policy due to water damage to the ceiling of one of my units.I only purchased the property a few months ago and I had an inspection done that did not show anything like this nor have I heard anything from the contractor that my property management company had go in to the property to take a look.None the less this is obviously something I am going to have to take care of.

Many students try, unsuccessfully, to sub out their lease over the summer.Expect damages, most students don't keep the place too clean, so account for that beforehand.

@JODALE Blanding Two different scenarios can take place depending on the severity of the damage. 

I recently had a condo receive water damage from the unit above, there was enough water that it damaged my unit and the unit bellow me.

Their only punishment was damaged credit, but now enough time has passed that their credit is restored and they are ready to start the process all over again.

What should I look at to figure out what may have caused this or the extent of possible damage?

You tell them they must vacate and do no damage then you will not take legal action against them (I call this the easy option) and you will then either allow them to use their deposit against what they owe you and/or set up a "promissory note" payment plan - which is enforceable by law.