Overtime red states experience more growth, offer better returns, tax benefits, plus landlord friendly.

For example, often fire damage is water damage--they put the red stuff out with wet stuff.

Not sure where that map is from but wouldn't Miami or Orlando areas and parts of Colorado (Denver, Boulder) and Utah (Salt Lake City, Park City) be considered "not cheap" so would be in red?

Most offers were contingent only on a renovation manager or inspector’s field inspection to ensure the house matched the photos and there were no major red flags.

That is the buyers agent responsibility to protect the buyer, to make sure they are making a solid investment, to go through an inspection report and explain it to the buyer, to schedule subsequent inspections if needed, to help the buyer to identify any red flags.

Use a DSCR loan - No DTI or the same red tape quasi govt loans have.20% down for a purchase and would require roughly 2-3 months reveres roughly for each REO ownedOnly target goal is make sure your market rent is 1:1 with your PITI.

Any red flags to look for?  

It's going to take some time for bid ask spreads to narrow and create buying opportunities for operators.As inventory starts to tick up, and deals start to stay on the market for longer, some sellers will come to grips with reality.That being said, now is the time to keep prospecting for opportunities and maintain top of mind in your sector as an active buyer.If you own small multifamily 2-4 unit, the market is still red hot.

If these places are generating positive cash flow, what potential red flags should an investor be on the lookout for?

I'm aware that I should be watching out for "red flags" on these older properties (i.e. old roof, water damage, mold etc.).