Are there some red flags which I need to ask or check for in evaluating the application?

Pat, that would be a red flag for a note investor.. although you could try it and list it on FCI exchange for instance and see what happens.

Now if there are other red flags, then maybe not. 

I did some research on the 203k and so far it seems like more red tape to maneuver through, however I haven't ruled it out as an option. 

I thought I was relocating to Redding, but jobs took longer than expected.

Before reading your post, I spoke with them as they are used to doing Subject To deals and they said that the policy holder would switch to my entity name with the mortgagor's name as secondary - I am interested to see what their feedback is with your suggestion -- as your approach seems to send less "red flags".

I always tell clients that if a bank is throwing up a red flag over some issue relevant to you as the investor, or over the deal itself, then there is real risk that should at least give you pause.

They finance large multi-family properties with very attractive terms, albeit you'll have more red tape...

Red text is not necessarily negative). 

After driving by this FSBO (classic red and white sign in the yard) 15-20 times on my way to the jobsite, we finally looked into it and saw it was a double.