Do a 5/1 arm @ 80% LTV and get $103K in cash out with payments at $1,790.

Make sure it explicitly explains the process for termination if you are unhappy with their services, but especially if they violate the terms of your agreement.3.

If they can drill out the lock and go in with no reprocussions then I would wait till they leave and drill out their lock and Hire armed security to camp out in the house. 

Also you may need to get a portfolio loan or some type of ARM product that mimic as fixed.* Yes, I agree with above comments that management is key.

As long as you're using that replacement property for investment purposes there's nothing prohibiting you from going into a business-like, arms-length relationship with a related party (the s corp). 

The only tack on would be to consider papering up the loan in a formal note to make it official (unfortunately things can happen between family members) and charge an arms length rate of interest or use AFR (just search for this term and there is a good article on Investopedia).

Make sure it explicitly explains the process for termination if you are unhappy with their services, but especially if they violate the terms of your agreement.3.

Payoff amount, payment PITI payment, ARM or fixed, current note?

You are armed with enough information to make an educated decision. 

I couldn’t find it in the statute and my guess is it has to do with preventing arms-length transactions.