if you are considering the risks of the short term rental, try to find on that the numbers also make sense as a long term rental. that way if anything goes south, you know your not at risk of being in the red monthly.

Hi I'm Joseph Woodman30 years old with two girls (5 & 3) and a boy on the way.I'm in the red hot (read: expensive) Northern Colorado market, but just had my mind opened to out of state investing. 

I would look at any eviction as a HUGE red flag.

First red flag is they don't keep track of their finances.

My state has taken the stance that transactional funding is a red flag to selling real estate without a license.IE they had to advertise the real estate to get a buyer and that using tran funding is a clear market that they had no intention to close on thier own and its part of their scheme to circumvent the RE brokerage laws.I finally got feed up with the is it OK is it not.. and got in touch with our state regulator.. and advertising any property you don't own in our state is simply not legal.. etc.. but then again they only go after folks if a complaint is filed.. they are well aware of this activity..

What red flags should I look for?

If they won't get these done than that is a Huge red flag!

As long as you figure it out in a way that makes sense you should be fine.One thing on the depreciation though, definitely do not amend your returns to take depreciation as thats a red flag and the improper way to adjust depreciation.

You can try cash for keys but don't pay one red cent until they hand you the keys.

Too many red flags here.