Plus there was a $500 fee that had to be paid to them for their fee and I was to cover all closing costs (their's and mine).Do you know if this is the norm for this company? 

I get them to cover closing costs, add in amenities like appliances, window covering, water softeners,  all the things we would have to pay for, they pay for, $ not out of our pocket is $ "discounted".

In commercial finance fees cover the cost of appraisals, title work and Dunn & Bradstreet reports, etc, etc.

Just keep in mind that your insurance will probably go up when you change your policy to cover STRs. 

But it's walking distance to the beach, in a great location, and had tremendous potential as a STR (which was the primary goal) and huge upside for appreciation.The only things I would rule out, and would advise my clients to consider walking away:  Major basement water problems, significant structural issues, and evidence that prior work was shoddy, or that work was done to cover up a bigger problem. 

Utilities are transferred to the tenant's name and they cover it.

The penalty does seem high (3 months' rent to cover 60 days of vacancy), but that is what it said and you and your daughter agreed to it when you signed the lease.

If you are interested in seeing what area is covered by the camera, I can send you a photo demonstrating the field of view." 

Allstate has covered 2 water damage claims for me over the last 25 years.

The DC area is one of the lowest cap rate markets in the country.In MoCo you'll generally need a 40-45% down payment currently to have your rent cover your PITI on a standard long term rental.