They give no official closing documents, just internal documents that I'm guessing are fraudulent. 170% profit in two years is a HUGE red flag🤯 

Up front fees (outside of appraisal fees) are typically a red flag when dealing with a HML.

Here is some key information:Property recently hit the market and has 2 cash offers alreadyThe seller provided a pre-inspection report, which I shared with 2 different lenders, both think it may fail conventional financing due to potential structural and electrical issues (realtor thinks it could pass conventional)Seller has 100% equity but is behind on other payments (not sure of the urgency money is needed)This is my first attempt at an “investment” property so I’m new to thisI see 3 optionsMove forward with an offer using conventional loan pre-qualification-Not as attractive of an offer to the seller-Possibility that appraiser calls out structural/electrical issues that need to be fixed before closing, effectively causing financing to fail- Best terms and fewest loan fees for meUse a rehab style loan such as ChoiceRenovation-Even less attractive than a conventional offer to seller, but less risk of failed financing if appraiser calls out issues-Slightly worse fees and interest rates compared to conventional-Lenders tell me possibly up to 60-90 days closing in some cases, with red-tape for contractor requirements and draw schedules (sounds like the most hoops to jump through during rehab)Use a hard money lender-Most attractive loan option I can give to seller so I can compete-Much higher fees and interest rate for me-need to refinance into a conventional at the end of rehab (not familiar with seasoning periods but I think this is a factor as well)Which option would you do?

Agree, STR are saturated but given the numbers, I expect unsuccessful players will leave the market.  

I don't really want to invest in a D-class area.Tangentially, what are some of your "it's time to sell this property" red lines when it comes to the changing economic conditions of an area? 

Than did all the red-tape fun to get things set, and completed soil corrections. 

That says huge red flag to me.

I will keep this front of mind going into future conversations and negotiations though incase it raises other red flags!

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You'd have to do the research locally, market by market, to determine who the players are.