Regardless of whatever "penalty" you settle on, be sure you do insist rent is pro-rated to their last day of possession, and keys are turned in.

We have a charcoal grill and a guest insisted on having a gas grill.

If they insist on fighting, give it to an attorney. 

An attorney would gladly take your money for the drawing up of a PPM, Subscription Agreement, etc if you insisted on going that route.

I doubt anyone is insisting that your plan is bad, but for a newbie, it does appear you are approaching it from a very simplistic aspect.

I must note at this point that I was ultimately forced to put down a 25% deposit, due to being married to a non-SA citizen - the lender insisted on this due to some rather restrictive immigration laws in SA. 

Also you should insist on any renter having their own renters insurance policy that also lists you, the property owner, as an additional insured.

2) If I turn around and try to sell the property, I would expect the buyer to insist on a Warranty Deed from me the seller.  

If the buyer bought owner's title insurance, which we insist on, title will reimburse their loss.Original OwnerThe transaction gets reversed, and the original owner gets their property back, hopefully undamaged.

We offered to furnish but they insisted bringing their own since they know exactly what their clients like based on their experience, I have no issues with that.