What if they build just outside the city limits, so they are not paying city taxes?     

@Kayla M. sadly as other have said, often out of state investors are paying more than is worth, and it can be tough to get back out of a deal.

Quote from @Matthew Beninate: Quote from @Sarita Scherpereel: Quote from @Seo Hui Han: You may want to consider local banks / credit unions just because many of them will require or give you more favorable terms for things like HELOC's and other line of credit products if you have a deposit account with them. 

I feel like marking up repairs is paying twice.

This can be costly for your property manager, and you may have to pay for their insurance policy, which can add unnecessary expenses to your budget.It strengthens your relationship with your property manager.Adding your property manager as an additional insured is a gesture of good faith that shows you are committed to protecting their interests.

There's very little way to go wrong here since the alternative is paying to live somewhere else anyway. 

The bottom line is that past performance is no indication of future returns.

Paying ~12% of the loan in fees/closing costs is quite high.

I would like to work out a payment plan whereby they pay me while I have control of the rights to the mortgage then in 10 years I pay off the principal.

You are a high w2 earner, The house is worth 110k today, you are buying from your grandma for 60k in exchange for free rent for life, upside ARV of 200k.The costs of owning the house will help provide tax relief on your high w2 earnings, you are buying a great chunk of equity that will pay off in the future, and you and your grandma are doing each other solids.