Knowledge mitigates risk.  

I stress to all tenants that they must do what they can to mitigate damage if necessary, like turning water off in a leak before it creates more damage, but they are not to complete repairs and can be liable for cost of inspections and additional repair if  necessary if they do it on their own.  

What is a good way to mitigate this issue, he wants his deposit back but the cleaning/damage is probably twice the deposit.

I think you are speaking of mitigating those extra risks and this I can understand.  

That's also a good way to mitigate risk.

I rent hundreds of units and mitigate the risk by properly screening applicants, taking a sufficient deposit, and having policies in place to get them out quickly if things go bad.

How do we mitigate the risks?

Managing and mitigating risk is far more profitable than attempting to avoid it.My $0.02 ...

Do most private money lending company's help you mitigate your risk, by analyzing your deals on their end as well? 

Multi's can mitigate some vacancy concerns because it's unlikely all units will be vacant at the same time.