I agree along the lines of @Peter M. in that there are a slew of landlords that will use a deposit for normal wear and tear.

If you are just tearing out kitchen cabinets and putting in new, new floors, paint, window installation, roof, gutters, etc. then those are not "complex".

It won't be a complete tear down and start new, but will cost around $400-$500 k in repairs and expansion, while the home will cost around $1.1M to buy. 

It is a shame, because over-all unit space is not the issue, just the layout/use of space but, no way am I going to start tearing down walls to "fix" it.

There's a greater likelihood of parties, increased traffic, excess wear-and-tear, etc.

The foundation began to crack and we learned that if we wanted to do ANY remodeling to the house, which we were planning to add a bathroom to add value, we’d have to bring the entire room up to code which basically involved tearing it down and starting over.

Not $2,700 worth of difficult for sure and I could do it in 2 days max including assembly of the cabinets.Had a bid for $800 to tear down the top 2/3 of the brick facade; took us 1 1/2 hours with a hammer drill.Bottom line, hiring contractors would probably eat away about $20k in profit if I hired them vs DIY. 

Sada, the Security Deposit is to be used to restore the home to it's original move in condition, minus normal wear and tear.

The long term strategy (5-10 years) will be to tear down this home and build an identical structure to our existing 8-plex, making a 16 unit complex.

I’d Tell them your okay with it and long as they don’t tear up the yard and park so as to not block anything or cause a disturbance with a neighbor .