As we work toward an end to renovations we keep finding additional hidden damage. 

This is the biggest reason why you don't want to buy a rental with negative cash flow, you want the lowest DP as possible, and you don't want to pay additional funds from your own pocket to pay down a mortgage. 

Others apply a little more common sense to the equation in addition to the analytics.  

An automatic late fee of $50 is applied to their accounts and an email (and/or text depending on their settings) is sent out notifying them that their account is past due and additional fees and/or eviction may occur if not paid in full.

You could add it to the "acquisition loan" portion, that way it isnt figured as a cash outlay

In addition to keeping the down payment will you be able to assess fees for the time and expense of him defaulting?

In addition, I can boost my 401K contributions after the first year to catch up again since I'll have the 8-9% return from the real estate investment. 

Scott,If the condo is owned in your name, check with your Homeowners Insurance to see if they can add it to the policy. 

Both of these loan programs can get you into a home with as little as 3% down, which would give you some additional capital/reserves for improvements after purchase, or a larger contingency/emergency fund, or a good place to start on your next home. 

Do I just need to notify them of the additional charges as part of their checkout?