Painting walls and cleaning the carpet (unless stained with grease and beach) is normal wear and tear and is a landlord's responsibility when tenants move out.  

Do I need a permit to start tearing down paneling and walls in the house?

Seller acknowledges and agrees that in reference to the physical condition of the Property, Seller agrees to: (a) disclose in writing to Buyer defects in the Property known to Seller that materially affect the value of the Property that cannot be discovered by a reasonable inspection by an ordinary prudent Buyer; (b) carefully review, complete, and provide to Buyer a written Seller property condition disclosure as stated in Section 7(a); (c) deliver the Property to Buyer in substantially the same general condition as it was on the date of Acceptance, as defined in Section 23, ordinary wear and tear excepted; (d) deliver the Property to Buyer in broom-clean condition and free of debris and personal belongings; and (e) repair any Seller or tenant moving-related damage to the Property at Seller's expense.

Now I have a 45ft wall that is pretty much destroyed from tearing the mirrors off.

While I'd never personally buy or build a new single family home, I'd totally buy a new multi-family property as new duplexes sell near what 2004 construction duplexes sell for and you have MUCH less wear and tear and will need lower annual reserves since you know your roof and your mechanicals will last longer.  

I'd be cautious about excluding pets if you're concerned about vacancy.C) While much better tenants (very little wear and tear on your property, good for rent, pass background checks), there is a need for many STR amenities (security conscious with parking spaces and the home, have nice bed/sheets/cooking supplies/coffee maker, high speed internet a plus - having great TV wasn't a deal breaker for those we surveyed)D) Mixed input on the proximity. 

Call it normal wear and tear and the cost of doing business, I’d think it’s not worth the hassle if the tenant tries to dispute the cost.We always charge tenants for bulk item pickups they don’t take care of themselves.

But apparently, TX has some really difficult homestead laws on the books that prevent me from accessing any of the equity I have in my place.My lender friend has suggested that I maybe look into converting my duplex into a condo regime, ensure that my homestead only applies to one of the units, and then refi my unit to grab some of the cash that I need to complete the tear-apart remodel of the next door unit, then rinse and repeat. 

If there is a way to selectively tear something out in a way which will be a benefit to the job down the road - that would be interesting to me.stephen------------

We will video and take pictures of items that need fixing beyond normal wear and tear.