Hmm sounds like you dodged a bullet, move on from this ungrateful tenant.

It sounds like you need to consult with Eviction attorney, CPA/ Tax professional, Great Realtor and Lender for this.

If you are gutting the bathroom, moving things, complete replacements will drive the cost. 

What manufacturer do you plan on using if you don't mind me asking  A manufacturer I use here in NC have a nice one story plan if you want to save some money on the finsh work Sounds good can you send me the Manufacturer? 

Even then, OOS REI will come with some significant challenges...Specifically, one of the MANY reasons OOS REI is so difficult (esp. for beginners) is that it requires you to assemble, manage, and incentivize a team of people you'll be completely reliant on from hundreds of miles away (sometimes without even meeting those people face to face).

I have known landlords that got completely hosed.

If they make a partial deposit it is not considered complete.

No living room sounds like a deal breaker, would at the very least depress the rent you could otherwise get for it. 

Which areas should i completely avoid?

Nowadays electronic documentation is the norm3rd comment - still sounds winnable, but might have required going one level up, to Appeals.