You have to get a parent to co-sign since most students don't have extra income coming in if they are a full-time student and you want double protection.

I like tenants who pay late but still pay each month free money for little to no extra time nor more money invested

You can still make money on LH properties, as long as you understand the extra variables, like monthly lease rent, remaining term, renegotiation, and fee availability/price.

We have some extra space in the back of our property and have considered doing something like that.

I know current CA law only allows a rent increase of 5%+CPI but is adding an extra $275/mo by converting that laundry room into a 3rd bedroom considered an increase in rent?

He also cannot do it in the extra 2 weeks that you thought it was going to take.

My place is somewhere in a B class neighbourhood, I’m thinking it’s worth the extra cost to maybe just commit? 

I didn't see "pay an extra $15k in taxes" in the original post so thanks for clarifying.  

Despite the damage, they made up for their mistake and covered the extra costs, so I plan to use them in the future.

A part of me wants to do a rent to own and keep it one single family 4/2 house and have the downstairs tenants go upstairs to cook food, and just rent it out for him for market rent which is about $2,400 and then give him his $1,200 plus some extra and keep the rest.