Insurance has gone up about 55-60% last 2 years with no claims thanks to all the lawyers that advertise on tv.

I’m not here to judge.Your claim of making $250,000 a month in profit would make you pretty much the richest guy on this site by FAR!!!

Send her any required notices (claim against security deposit, etc), change the locks for real this time, turnover the unit, and move on.You should be able to charge her (and claim against her security deposit) for removal, disposal, or storage of her personal items, cleaning, damages, etc.

You make a good point on the warranty claims. 

Would it be a good approach to terminate the lease and get someone else in and go after him in claims court or collections?

You might need to Quit Claim the deed to your name. 

I recently stayed at a slightly different 1 bed property which is ~30 minutes from the area and closer to 'normal' civilization, Situation B, (with amazing views), and the owner said he has a 6 month peak of 100% occupancy and 50% occupancy the rest of the year.I've looked at AirDNA, which I've recently learned about, and the free views claim that that rentals in Situation A have 50%+ occupancy rate, resulting in nearly 2x the revenue I would expect from from the information from the management company in the area. 

No problem with the quit claim into our LLC.

If you are an 'additional insured' you may run into trouble getting your homeowner/fire policy to subrogate a claim to the rental policy. 

I am assuming you will take out a loan under your personal names and then quit-claim to an LLC or you may have a commercial loan and buy it under an LLC where you and your partner serve provide personal guarantee.