Good screening, and I stay away from beachside, not only because its rougher but also away from flood zones.

- How do you assess the market and identify red flags?

Sellers did not allow us to get professionals in to give estimates for a french drain before closing (yes, our red flag we should have walked away with), but agreed to lower closing price.

Got out of that deal - too many red flags. 

Are there concerns like location, zoning or land use, or is it simply about passing the inspection if it's a residential use?

Several posts I have made I have failed to include “check zoning”, but the reader must do their due diligence.  

., tours, etc) however, many applicants had evictions and poor credit history (low credit score doesn't bother me, but when you have 7-10 credit card and personal loans in default, it's a serious red flag.)

I do not want to re-zone the house to sfh, at some point if I want to close the access I want to be able to. 

One tiny little corner of the building shows in the flood zone, but of course that drives the classification for the whole property.

Key is getting it zoned for as dense of a multifamily property as you can and getting it built!