Plus, you may have to evict them or ask them to move on if they did not pay or caused other issues (which could mean the end of the friendship).

Thanks for your responses Max Tanenbaum Rod Hanks Matt Hoyt What I am most worried about is the amount of damage that has been caused.

Under the “implied warranty of habitability,” the landlord is legally responsible for repairing conditions that seriously affect the rental unit’s habitability.81 That is, the landlord must repair substantial defects in the rental unit and substantial failures to comply with state and local building and health codes.82 However, the landlord is not responsible under the implied warranty of habitability for repairing damages which were caused by the tenant or the tenant’s family, guests, or pets.Generally, the landlord also must do maintenance work which is necessary to keep the rental unit liveable.

IF it is allowed to do this without causing legal issues, I believe you would have enough arguments to charge that fee.

It has some cracks in the brick; Per inspector it was due to run off washing away around the foundation, causing slight settling.

A recent renting study showed that it expects the homeownership rate in the U.S. to continue to decline for at least the next 15 years, which will cause a sustained surge in the demand for rentals.As consumer demand for rentals soars, it begs the question, how will the market manage to keep up?

His friend does not help with lawncare, has had an unauthorized pet on the premises, and has painted a room (causing damage to the floors and trim) which also violated the lease agreement.

Just know that the low inventory will cause you to work hard to beat your competitors.  

Mortgage stays the same ($2600/mo)From what the loan officer was saying, the HELOC (scenario 2) could cause me issues due to income.  

When you do move out, your income from the additional unit should more than cover any additional expenses caused by your moving out.