Last question, you are hiring an architect and submitting plans to the city in a renovation like this correct?

It shouldn't be a recurring scenario (or it looks a little less "accidental") but in cases like this, your job is to simply have the correct intent, see what you have done to demonstrate that and build your case.

Local Economic Indicators: Monitor local employment rates, population growth, and housing inventory to time your deals correctly.

Those who commented are correct.

Hey Joe, Having a large number of rental properties and installment sales can certainly make your tax return voluminous, but as long as you're maintaining accurate records, filing everything correctly, and reporting all income, the size of your return itself is not necessarily an audit trigger.

Record lease data using software or spreadsheets, correcting any errors or discrepancies.   

You won't know the ARV correctly or the repair costs so your budgets will be crap.

I always worry that correcting them or trying to contradict them will come off as condescending and do more damage than the review itself.How do you all handle reviews like this?

Your numbers may be correct that its hard to cashflow significantly on a STR with a mortgage in 2024. 

What @Joe Jor said is generally correct.