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. 

However I have reado enough HML website claims to be utterly confused or enlightened.

Thankfully we are still working but unemployment claims across the country are at record highs and this is my tenant pool.

If you are a contractor/1099'd you will need to file your own claim.