In terms of your grandfather living there as long as he's not the owner having a dwelling fire/rental property insurance policy is appropriate.As @Greg Scott pointed out he should have a renters insurance policy whether or not he's actually paying rent.In terms of liability coverage, that depends on what you have to protect so there's no one-size fits all approach.

Market rents are $650 for a 1/1 and $1,200 for 3/2 in the area for this size house.   

If its near Jersey City or anywhere in Hudson and Bergen county, I have developers that buy site unseen 24/7 if in a good area, decent lot size and reasonable asking price.

See the chart below.I follow all rates they publish which will be:*LTV = 0.55 & DSCR = 1.50*LTV = 0.65 & DSCR = 1.40*LTV = 0.80 & DSCR = 1.20*Fixed - 5 yr, 7 yr, 10 yr.

Recently I saw some decent sized laundromats that were priced in the $600-$850,000 range.

The difference in this portion of the execution can be $30k-$60k/yr more money in your pocket vs. that of our competition all other factors equal (such as the property size/location).Next, to drive costs down, I co-host (only for clients) at 15% which is 5-15% less than the large PM firms.  

My partner and I developed a banking relation with a moderate sized Texas bank 11 years ago.  

When companies reach the size of Greystar or Western Management customer service really starts to suffer.

However, you should factor in the legal cost of pursuing versus the size of your investment because this can be an expensive endeavor alone.

That will allow you to keep your low rate on $170k if you have a low rate, then have a line of credit that is only the size you need and easy to pay down.This approach keeps your $170k liquid, sets up a $0 balance HELOC for the additional principal you can get and you don't pay for the additional principal loan in the HELOC until you use it, and only for what you use.