Wa `alaykum as-Salamu wa Rahmatullahi wa Barakatuh.

In the Name of Allah, Most Gracious, Most Merciful.

All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.

If you are sure that your grandparents earned their income in a purely haram way, then you should not use the rent from home she bought with such income. The Prophet (peace be upon him) said, “A body nurtured or nourished by haram is a worthy fuel for the hell-fire.” (Ibn Hajar)

Once Sa`d ibn Abi Waqas asked the Prophet (peace be upon him): How can I ensure that Allah answers my prayers”, he said, “Make sure your earnings are from pure sources, then Allah will answer your prayers.” (At-Tabarani)

Therefore, a penny one earns ethically is more blessed than a million dollar you earn through unlawful ways.

If, however, only part of her income was earned through haram way, then you may use the rent as long as you cleanse it by optional charities and Istighfaar and staying away from such practices on your part.

Allah Almighty knows best.