The interest rate is not special nor is the 20% down (80% LTV).  

-Ray (see above) is the man and can get you hooked up with great rates and low-fees!

Yes, generally speaking, depending on tenant class, it's best not to get too friendly with your tenants.

It's dependent on your situation. 

At the same time depreciation recapture is taxed at regular tax rates, not capital gain rate.

That was when the market was stabilized, rates were sub 4.5% and distressed properties actually sold for a significant discount.Today, distressed properties sell for a premium and cash out refi rates are over 8%. 

It's worth a conversation.IF you determine that selling is the way to go, $1M could buy you a comparable property in Scottsdale, depending on where in Scottsdale you'd like to be, and how much land you want on your lot. 

It really depends.

AND, your son will be at the mercy of the SELLER and dependent on the SELLER's good choices for the life of the loan.

But that's just me, maybe your market can tolerate higher nightly rates.....I agree with Bruce.