I am not sure if I should pay off my mortgage of $270,000 at 6.5% or should I do a 1031 exchange and invest in a rental property. 

Make sure your attorney counter sues.

Both the liability portion of the renters insurance (which your renter will pay) and the umbrella policy are generally quite reasonable, but I am sure that varies also with where you live and own property.

I'm sure I would need a private/hard money lender before being able to refinance the property with a conventional lender to obtain funds for the home.

I'm sure some will reach out to.

@Michael Snider-Held we hear stories like this all the time in the LTR market about the national companies.These companies are setup to make money, period, with little oversight from management.So, owners need to make sure they read management contracts and UNDERSTAND what is covered and not covered. 

I’m sure you’ll quickly be berated by “Loanman” or “Edible Investor” for whatever you decide to post.

Learn how to manage better.

I can never know for sure if the pipes or wiring was replaced (my biggest concern), I don't think an inspector can actually tell as well since you have to tear down the entire house.

I’m sure I have to have the son fill out the applications also but looking for some guidance when it comes to co signing and how you guys do it .