This will ensure you have adequate margin of safety & room for a positive surprise.

You will want to have a CPA ensure it is done correctly. 

How do you conduct inspections to ensure it's not being trashed?

Again, I'm looking for input from other investors to ensure that I'm not missing something or if I need to look at things in a different light.Thanks!

I would highly suggest you get a well inspection before the closing to ensure there are no issues with the well and if there are make sure they are addressed.

Sounds like that's the path I'll have to go down anyway, but I will just need to ensure the new loan does not have a DOS clause. 

Drawback is you'll be splitting an assignment fee with them.In order to provide the most fair price and most information on your deals you will need to be extremely efficient (because you are adding even more value which is harder to find). 1) You will need to lead gen like a machine. 2) When leads come in, you will need to be able to disqualify the bad ones extremely fast.

If so, why do I need to ensure tenant #2 is able to pay the full amount in the event tenant #1 leaves?

Only thing holding me back is the opportunity cost of having that cash sit in the property 6 months- 1 year before I refi, as well as the capital gains that are triggered to pool the money together although this May still be the most cost efficient way to go as the hard money loans are much higher rates...

Many will talk a big game and you will want to do a thorough check on them to ensure what they say is what they do.