If you're very cash flow positive and a HELOC won't turn your cash cow dry, then tapping the equity to invest elsewhere for positive cash flow wouldn't be a bad thing.If you are just breaking even or only slightly cash flow positive, a HELOC, when tapped, will put you in the red. 

I don’t know what to make of this but my gut says it’s a red flag even though both properties meet all of my other investing criteria.

Vinyl siding was added at some point mostly likely the 80's, There is a well on the property and irrigation also, the backyard has a huge banyan tree that needs to be trimmed and its root system has taken over a large portion of a brick patio.

Once I get my main job situation figured out and plant roots somewhere, my goal is to own five rental properties  in five years and manage them myself.

Even red necks fools and old people know what they have these days and expect to get paid .

The part in the red bracket is where I am confused.

Other than that, usually there is no upfront costs to be paid.Other than these; if they ask you send money for processing upfront; that is a red sign. 

You have plenty of red flags and obviously see them.

Actually, your risk is cut by more than half because your partner knows what they are doing and will help you avoid red flags and bad deals.

While the bank has no issue loaning me more money than I could ever afford, there seems to be a lot of red tape around selling our current home, the builder plans being approved, 20% money down, and other bank requirements I probably have not encountered yet.