I see a little bit of a red flag in the fact that his students are closing so many deals in Texas right now - in such a tight market...

The only slight red flag was that they only accepted payment via Venmo or wire transfer, but that's how I accepted payment when I was selling lead bundles, so I still thought it was worth a shot.

Ditch the red rug, increase art and add dresser, bedside tables to bedrooms.

Family or not it's giving big red flags. 

If you conclude the leverage is so good that everyone comes out ahead that's fine but if you are only able to originate hard money debt that may be viewed as a red flag by investors who will question your experience and borrowing strength.

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

And won’t parties involved see red flags waived by all this “out of space” subterfuge?  

A lot of the time, most of the other students don't know what they are doing and they or Pace have never truly shared how much they have made on a property, so that alone is a red flag.

They try to act like a servicer and broker at the same time (these are not owner-occupied so not as much red tape) but in reality, they are just a broker that pairs a borrower/flipper/landlord with a lender. 

Many insurance policies also require re-development within two years, a near impossible timeline in a region with the coastal commission, perhaps only second to Manhattan in terms of permitting and red tape.