I would be so deep in the red.

Below are some actionable steps I plan to take after identifying a market:- find a rock star agent by referral and/or calling brokerages and asking to connect with their top producing agents- find a rock star contractor by referral and/or yelp- have control over construction by setting per diems to incentivize contractor to finish the project on time, within budget, and with good quality- leverage my rock star agent's time to check up on the construction process (checks and balances)- hire independent handymen/inspectors to check up on the construction process for a flat fee (checks and balances) There's competition everywhere, you won't escape that in any market. 

Memphis is a great place to invest, I'd also recommend areas like Little Rock, DFW, Houston or Oklahoma.

You'd be better off of in Little Rock.

These are business purpose loans so there isn't any sort of red tape when purchasing multiple properties at once or one after another.

The licensed plumbers do not get permits for water heaters, I have never heard of one being red tagged solely for not having a permit so I do not get permits (and know no one that does) for swapping a water heater.  

That says huge red flag to me.

Let me guess, RH, REDS , ALL S Monument ? 

I did all my other due diligence like asking for paystubs, W2s, Tax returns, Employment verification, bank statements etc etc and did not see any red flags overall.

Have you considered other areas like Little Rock, AR, or Memphis, TN?