For those keeping track at home, the landlord's income in this scenario is 1000 + 1006, a total of 2006, with expenses of 1005 for a net of 1001. Real-world statistics say that median 2br rent in America is 1850 and median mortgage (which I assume to be skewed upwards by houses that are larger than 2br) is 1600. That's an absolute minimum of 3000 a year between maintenance and net profit.

A previous modest dwelling I lived in now sells for 75k, has fair market rent of about 900 a month, property taxes of 200 a month, 30-yr mortgage payments of 350 a month. Even charging only 800 for rent, 30 years of this will be 90k in rent plus the equity. Unless there is 250 dollars in damage being done every month, the property owner will come out well on top.

I refuse to believe that every tenant requires a renovation afterwards. But maybe if you gave a long-term tenant a stake in the ownership of the house, they would be incentivized to preserve it better.

Landlords choose to own and lease buildings because it is lucrative. Tenants rent because they have no other option.