Its since sold and whomever is rehabbing it is making it look really nice, but I seriously wonder WTF was going on in that one "dark red" bedroom, like there was a cigarette smoking competition going on for the last 10 years. 

I am not currently house hacking, but this allows me to rent the home for a profit when we move out in 6 months, which would be impossible if I took out a new loan to purchase.I have blog post on this topic if anyone wants a little more of a deep dive into the powerful strategy of combining these two methods!

That's the red flag for me.

As for your negative cash flow situation, being in the red 900/month is not a good place to be in, especially considering an emergency can happen at any time.

LA cash flow is certainly deep red. 

What are some red flags to watch for when interviewing Property Managers?

Be suspicious of these red flags: any last minute changes just before closing, anything sent via email, anyone insisting on using their own title company or notary, any title company or notary that your closer/agent hasn't used before.

I didn't conduct a deep dive in to the neighborhood comps but this initial observation points to a pricing issue.

Watch out for fine print that requires an additional fee at closing - this is a huge red flag and how most flat fee companies make money.

If you can swing hiring a PM without putting you in the red on cash flow even better.