From what I understand, banks tend to avoid financing properties with SRO units due to the perceived higher risk (inconsistent cash flow, transient tenants, zoning issues, etc.).

-If it isn't zoned for three units, then it isn't happening.

Consider zoning regulations, nearby development projects, and market trends to gauge its potential for value appreciation or rental income.

As someone with no experience investing into a syndication, is this normal, a red flag, or possibly ok depending on other variables?

I'm considering buying a property in Southern Maine that is about 5,000 sq ft too small to legally subdivide per the town's zoning rules.

I am only doing so because during my normal screening I found these red flags. 

This is definitely not the path I would take unless the numbers are sweet and STRs are fully legal in the zone your are buying.

From being warrantable or not, to dealing with HOA red tape, and trying to get a hold of the condo PM, huh, good luck. 

For example, one steady red flag I've noticed is if the tenant tries to overly sell themselves almost with a rehearsed pitch before you even start asking questions especially. 

Its tough living in a construction zone but it can also offer you both an investment, education and place to live for the time it takes to complete the renovations.I actually started by using private money (people I knew who had money) and used them as lending partners.