The reason I would look for another family is that you will often have one person wanting to move out or they don't remain friends and then have issues. 

When they agree to paying a larger security deposit it shows they have a stronger financial position (vs. living paycheck to paycheck) and it provides them extra motivation to take care of my property. 

I find that unless a seller is highly highly motivated, these aren't credible or they get rejected (especially if the seller is working with a real estate agent or attorney).

., a portion of its income will be added to your ability to service the loan, but you will still likely be required to come up with 25% deposit if for an investment - and they will only be lending that remaining 75% on the PURCHASE price, not what it should be worth!

Yet essentially home sales in the US has remained steady at 5 million transactions a year.

Once I have an idea I would determine the cost to replace and simply divide by the remaining life expectancy to give amount needed to save by year or month.  

My question is: can I require the current tenants to leave the home during the buyer's inspection, or do they have the right to remain on the premises?

Unless you have Full Replacement Coverage, you get hit with this - - and it's the motivation for having that coverage.I have a great policy with Farmers and 100% replacement costs from a tenant caused fire.I can't imagine Buy&Hold without Full Replacement Coverage

To remain liquid, I'm considering putting a small amount of debt on it. 

I think you will have better luck with an estate sale or a motivated seller.