They only do that to make more money under the guise of protecting you - pretty much like a store offering additional warranty protection on electronics.

We are planning to live in the owner's unit and tenants above have lease that is expiring mid 2024.

Are you planning on holding these properties forever?

The type matters and their plan on acquisition and exit strategy.  

Upon expiration of said notification I believe the title is insurable and you can acquire a warranty deed.

I’m planning to buy an investment home that is already rented.

Mind providing more clarity on the asset you are purchasing and the overall business plan with making it perform? 

They did give you info that they love your place, plan to stay forever, and accordingly you should increase the rent $250 per month if allowed by your local laws for the aggravation of dealing with them. 

We also plan to have a performance deed that will help protect me in the event he defaults and the property will be handed back to me.

I plan to buy, rehab and refinance.