You will be amazed at the sort of damage they do and wonder how it was even possible.

Dropping the whole "friend" shtick :PThe property has a number of issues and a long history of code violations due to unrepaired tree damage. 

The buyers inspectors literally praised the work we had done throughout, but a week ago the CL-100 wood infestation inspection came back noting a small bit of non-structural exterior sheathing damage along the bottom of the back wall behind the vinyl siding due to moisture :( The good news is we are 99.9% sure the issue was caused by rain water coming off of the roof and landing in an area that had standing water before we brought in some dirt and gravel to resolve the drainage issue during the remodel (townhouse is on a slab). 

It seems to me from my internet research that I can't touch the deposit unless he fails to pay rent or causes damage to the property.2- Is it wise to touch the deposit before he leaves?

Hey everyone, I have been doing driving for dollars lately in my local area and I have found a good amount of homes that look distressed and could be good opportunites for wholesale deals.Today I called one of the owners of the property and she said it was her fathers house who passed away and it was near the lake so it has a lot of upside, but it had some flood damage to it.She said she wasn't in a rush to sell it but if the offer was good she would consider it, the thing that kinda confused me was she said the house is nice but the property value and the lot was where most of the value was.

I learned that the fire department can do way more damage than the fire itself.

Doesn't sound like you have any safety net for capex or damaging tenants. 

Is there a possibility of structural damage ( stud rotting) due to rain pouring in through hole in roof?

During the lease back period they did something like 20-30K of damage to the house.. 

When our renter was moving out, his friend who was helping him move damaged the garage door of another unit.