I totally agree with you that there is no point in giving someone a tax free gift every year, however I think my family member finds the prospect of multiple simultaneous vacancies a little overwhelming.

The intent is great... but after a few months, the tenant (jobless or between jobs, who was REQUIRED by law (because they have 'income' from a "short-term rental assistance" gift source) to become a tenant) will be in default.

The neighbors watch my more remote property, (a $50 gift card at Christmas encourages this) and the PM drives by my city properties weekly. 

I think a work around for that would be if your grandparents were to "gift" you the money for the down payment.

If you are so worried about send them a letter and include a $100 gift card to show your appreciation. 3% of 1500 is $45.

What the lender required, was that they write a letter saying that the money was a gift and not a loan.  

I think gifting tenants is a bad idea.  

The freaking out tenant and whatever happened can be resolved after I get my shut-eye.And the only housewarming gift I strongly suggest you give your tenants, is a new toilet plunger you leave by the toilets.

I have taken to going over and seeing them for 15-20 minutes, together with a small house warming gift ($20 budget, orchids from Costco are a favorite, as are gift certificates for bookstores and movie tickets).

Well the only polite thing to do is to bring your own towel and possibly a gift for the host.