Everything in writing....The ties to the previous owners make me nervous......you are now the owners and they aren't YOUR friends or family....and they have likely gotten "special" treatment by the previous owner....no more..... be strict on rent payment (i.e no late, no partials etc)

Powderpost beetle treatment costs a bit more than other pest treatments, it requires some expensive chemicals. 

By bending or giving on any of your written agreements and policies, you can be accused of offering un-fair treatment.  

Property eligible for 1031 treatment is property you intend to hold for productive use. 

If the latter, what is the tax treatment for this fee?

If this is new it is caused by tenant behaviour and treatment will not help, they will come back.I have never had roach problems so can not advise on costs.

Seller has also agreed to a 1yr home warranty and termite treatment as evidence of termites were found during inspection)*roof is old, will need complete tear off when it's time to replace.

I love all the ways you can make money in RE...tax treatment, equity building, appreciation, etc. 

You are entitled to fair treatment, which means proper notice and reimbursement for damages.

In addition you'll loose the capital gain treatment on the sale of the property because when you take an IRA distribution it will be taxed as ordinary income.