Having developed a majority of my career in CA the regulations and red tape for construction and development are intense. 

There are more serious red flags that come up during the screening process. 

If you conclude the leverage is so good that everyone comes out ahead that's fine but if you are only able to originate hard money debt that may be viewed as a red flag by investors who will question your experience and borrowing strength.

The Cape Coral Code Compliance officer showed the roofer the various emails to BTC, which left the roofer very unhappy as he then knew he had been misled and made him liable for a fine for illegally performing work while a red stop work order was in place.BTC appears to be continuing to cause damage to customers and other contractors. 

This guy's name (Mario Cotto) came up as a red flag at our meeting last month.

If the property breaks even, or operates in the red currently, it will only operate deeper in the negative (unless you find a strong ROI like creating more bedrooms, convert a non living space to living space, etc) with another loan. 

Negative cash flow with high HOA fees is a red flag.

Quote from @Dennis Bragg: Alan, I’ve got to say, taking on a major construction project like this in Ardmore is a bold move, and I admire the ambition.

Real estate for the last four years was betting on red or black but the ball was fixed to win as it was nearly impossible to lose.

Family or not it's giving big red flags.