This was way more damage than my one month's security deposit would cover.  

Then, the third time they checked after the listing agent said it was accepted they see the water damage.

I have placed a tarp over an open roof on a property (to minimize any further damage) and have also done some yard work before closing. 

Some policies cover rent loss if there was damage to the unit and unihabitable for the tenant, as well as landlord legal fees, etc. they may be liable for.

I know it's not a good idea to rent to friends/family but I naively thought it'd be fine.It is NOW, but it was touch and go when he moved out due to some difference of opinion on damages and rental deposit refund.

The gambrel is a unique style that at least provides more adequate clearance, re the upper roof line, than cape cods.The last property I rehabbed had 15 year old wood framed Pella windows that were NEVER installed correctly & this was once a 'model home'.All had suffered severe water damage & rot within the lower frames & sills regardless of any roofing overhang.The studs around the window frames exhibited rot, as well as some of the flooring directly below the windows.

Also, several states require that you have a physical office in that state.

Termite damage?

They might have no problem buying a bulb, but what if they're elderly or have a physical disability that prevents them from reaching the ceiling?

There might be some damage that can not be seen in the pictures.