Keep in mind you will probably have a deductable to pay first.

They are essentially giving the property to you at fair market price, so someone is going to need to pay taxes on that fair market price.

Why pay off the mortgage early? 

Step 2- close and start rehab-- would need to pay holding cost during rehab?

15% down with no STR experience - you're going to have to pay a price for that.

Now, I'm imaging a scenario when every one of these tenants move out that I'll be paying their entire security deposit + interest even if there are damages beyond normal wear and tear. 

Your son is likely paying more than the property is worth, by definition, as the seller would almost certainly prefer a similar offer that was not subject to. 

My area is relatively low crime, but had one place that someone broke a window to get in.... probably a homeless guy looking for a place to sleep....got scared when neighbor turned light on.I put in a SimpliSafe unit... portable, easy to set up, multiple options- you can use a webcam and get alerts on your phone and future tenant can pay for full service if they want. 

My goal is to offer an affordable monthly payment that competes with renting a comparable property and offers a benefit to paying a bit more to "own". 

So they price those homes at what a willing homeowner will pay for their personal residence.