In theory less wear and tear on the unit itself, furniture, less cleaning, etc...What’s your method for determining your nightly rate and how do you ensure your maximizing your potential?

Doesn't seem like they could just come in and tear that up..

Some of the small things I like to improve at turnover or purchase, mostly at little cost if you do the work yourself....Paint everywhere, new flooring if needed (LVP is great, but Home Depot free tear out and install of carpet is cheaper in the short term), new toilet seats and handle, new lighting in bathroom, new handles on all doors (I like brass nickel), new fixtures on sinks and showers, ceiling fans, change all outlet and light switch covers, cabinet hardware, replace appliances if needed, supply washer & dryer if appropriate, clean up and improve landscaping, new blinds, supply curtain rods so they don't destroy your drywall, paint the front door and or entryway. 

I can only speak for our area, but functional obsolescence would not be a reason to tear anything down.

If it only has one layer then most cities allow you to just shingle another layer over it which is not as expensive as a tear-off.

Ideally something that needs some rehab but not structural or tear down so I can build in some equity. 

There will be lots of wear and tear,  Would it be better if you marketed it as 3 bedrooms and 2 offices or a den or playroom? 

A one bedroom is likely to be a single person or perhaps a couple, a 2 bed may be a family of 5 with lots more wear and tear.

Keep it in the back of my mind and when something happens to the guy get it surveyed and ask him to tear it down ?

I haven’t even considered the costs associated with:— lawn maintenance (I do this myself)— snow removal (I do this myself)— vacancies (luckily, I haven’t had any yet)— wear & tear %’s (mentioned in “The Book on Rental Property Investing”)— and there are probably others I am forgetting..^ if I were to add all those I’m sure I’d be losing money :( have I just been getting myself into “bad” deals?