Which raised some red flags for me.My concern is I don't know the real reason why the seller is selling the property. 

This is the biggest red flag for sellers.Well, this sounds great for Buyers.

I looked at a couple of deals of his a few years ago but they seemed like bad deals, red flags, so I passed. 

It has appreciated almost 2.5X of the original purchase price, however the cash flow is typically $25 in the red every month sometimes more with maintenance issues. 

He began to raise his voice and challenge me as to why an oven would be so dirty… I offered that I had used it a few times and that it didn’t smoke but had not deep cleaned it.

So yes, it could lead us deep into the woods quickly. 

If they say 'no', that is immediate red flag and I will ignore that.Do legitimate and genuine private lenders go through 'Escrow' process ?

I've seen a few properties in Colorado mountain towns for sale recently with STR licenses that transfer with the property (rare to find because the waiting list to get a license is many, many applicants deep.

I haven't researched it much but I tend to see a fair amount of listings for this type of home and am just interested if there are any regulations, rules, red flags I should know about if I decide to pursue this niche.

You'll have them paid off by the time you retire and will enjoy a significant boost to your retirement income.Generally, you want to grow your portfolio wide (more units), before you go deep (paying off).