said by CarGuy1 :
Would this set up work?
Is it's proximity to the House router (approx. 20 feet) problematic?
Potentially. You'll probably want to run the two wireless routers on channels that are separated by at least 5. Depending on other sources of interference though, you may need to try changing channels on both routers to find the best performance.
Also, do I need to put a repeater at my Grandpa's house.
You could put a dedicated wireless bridge at House 2, but with 25 yards line of sight it's probably not necessary.--