They are causing huge disturbance by doing drub and trashing the place to the worst condition you can imagine.

I am a realtor in the area and would be happy to send you some examples of successful STR's up here, and what the market conditions currently look like. 

Was already in great condition.

Depends completely on the condition of the property.

Most buildings that i've been finding right now are not accepting FHA financing due to the either the condition of the property OR because there are tenants residing the entire building. 

The tax assessor started asking me all sorts of questions about the current condition of the property (what renovations had we done, did we have any tenants, did we plan on having any tenants, etc). 

For that matter most owners toss it too but you are more likely to at least get it to the right person.As for financing, it will depend on how much time you have, the condition of the property, and what your budget is.  

When buying a property, you might consider a warranty if anything that would be expensive to replace is in questionable condition.

I do not know your specific market, but Id strongly suggest you speak with a local property manager that can help you asses what market rents should be with your properties, both in current condition, and also with renovation plans put in place.

But, in the market conditions during my period of getting to $25K and then to $100K, I found this to be true.