In general ground up ADU additions in SF zoned areas cost significantly more than they will appraise for.  

That includes zoning, (including a zoning letter to confirm legal use) building, permits, sales tax, licensing, etc.

Any red flags to watch out for?

If you went to the roulette table and they paid 3-1 for red vs black vs 2-1 then that would be awesome but if it paid 1.5-1 that would stink.

There are still restrictions on setbacks from property lines, but local zoning and HOAs can no longer stop you based on the state law. 

There certainly is a "no fly zone" for purchasing, and criteria that should be followed for a sound investment opportunity.

First, allow me to define small value-add Multi-family, I speak with a broad brush.. anything legally zoned duplex up to 50 units (I'm excluding Class A-B big MF) To set some context, most of the investors that reach out to me are not from Charlotte, or are not intimately familiar with the market here.

That at least gives a red flag to future landlords.

PE red stamps em and AHJ issues permits.

It’s a Class B maybe B- neighborhood right across the river from a Class C town attracting opportunists that steal if you leave something out or unlocked.The tenants has a few red flags and I’d like some input on them after listening to some rental books.