My concern is the increased wear and tear on appliances, plumbing, etc that come with 6 adults living in a home.

cast iron pipes, aluminum wiring, asbestos, lead paint, non compliant breaker boxes, are all money pits, but older houses are sometimes on land  that carry the value in the land, so would a partial tear down rebuild make sense?

I had to tear the kitchen completely down to the studs and rebuild.

Paying $225k, tearing down a house, building 2 condos that sell for $180k would be a big money loser. 

Grade them from A (just cleaning), B (light rehab - a few grand), C (heavy rehab - up to replacement cost), or D (tear it down and replace with new) and plan accordingly. 3.

When the day comes that the tenants vacate the property, it is their responsibility to return the property to the it's condition when they originally rented it, minus any normal wear and tear.

Yes, most of those things need to be done and on rental properties are replaced far too long after showing signs of wear and tear. 

If it's a flip, tear out the whole thing as part of your rehab expenses.

I added a door to wall off the mother in law suite which I now live in, and had a contractor add a sink, stove, cabinets, and also had them tear out the rug in that "7th" room to add vinyl plank flooring.

The more people you add, the higher the wear and tear on the cabin, furnishings, decor, etc.