Present it as a win-win and you'll have a better chance.Another point, and I hope this isn't too callous, is that since you don't seem to have an emotional attachment to your grandfather's house (you're not writing about fond memories of him or how he wanted to keep it in the family but, rather your post reads to me like this is a great target of opportunity), perhaps let it go and find another property where the seller is more motivated to sell. 

Surely I can't rent just to the insurance company; if I didn't get paid I suppose that would make it harder to evict the tenants.Despite these complications, I recognize that, if this and other insurance companies have a ready supply of clients with a need for temporary rentals of a few months, that could fit into my plans for this house, which my wife and I hope to use ourselves, but only in the summer.I'd appreciate some suggestions.

In my price range (<$400k) I can either get ~900sq/ft 2br/1ba down town or as much as 5br/4ba a few miles out...Emotionally I want downtown. 

Hi Justin,Really sounds like she could use help right now... not just in finances, but in prayer and emotional support.  

The damage is done and Do what you need to do and keep it off your emotion.

I took the emotion out of it because they were an older couple and had some health issues that got them all kinds of sideways.

She thought to just sell, but due to the existing problems with the house, a bad agents, fees, and other emotions, she decided to sell to me after two months of talking.Terms: 15 year lease option, Listed for access to the mortgage so I communicate with them as owner, and filed at the county with owner interest.

If you have more self control and don't get emotional on over bidding then you should try auctions as well.

What temporary heat source should I use while rehabbing an apt building in the winter?  

Then I highlight orally the list of issues.Think compare/contrast the lease conditions vs the factual differences caused by the tenant.Attachment A) is the lease signed on mm/dd/yyyProof of Service is Attachment B)lease payments due on 1st, late on the fifth and the tenant is always late even up to the 15th as evidenced by Attachment C) payment history for xx prior monthsunit is to be kept clean Attachment D) shows pictures of the exterior which impact my ability to rent other unitsKeep emotions out of the discussion and if relations between tenants is an issue, just state:Tenant said/did xxx which impacts quiet enjoyment of the other tenants.