Claiming REPS is a red flag for auditors, so be sure you log everything in detail with your CPA from day one. 

Is this a red flag?

@Ashish Wa You have to be careful with local laws but ESA is definitely a red-flag.

Kidding aside, there are some red flags here, but not enough info to advise upon.Mike

Some years it might be in the red but I have the means to put money in if it does (though not ideal).Not everybody can do this.

I've gotten to the point where previous home ownership is a big red flag to me.

assuming work completes after closing.In the event of an audit, is it a red flag if we claim an "improvement" after the closing date occurred?   

This is also a red tagged code violation in almost all cities. 

And is walking into a turnkey ready to rock building, the seller (whom I am presuming is now broke, but that may not be the case) even left the tables and chairs behind, all ready to have plates full of unethical inorganic genetically modified red meat dipped in butter placed on them. 

If a lender is not adhering to this common safeguards then that would be my first red signal .