In somce other areas we have invested there have been zoning issues with the muncipality. 

First thing I'd look is the zoning for that property to ensure ADU/multifamily is even possible.

Would you have any recommendations, in your experience, for what to look out for in the documents that would be red flags or items that would negotiable?

Legitimate lenders may charge a small application fee (around $250) to verify you’re serious, but if someone’s asking for thousands with no real intention of closing, that’s a huge red flag.On a more positive note, there are creative financing approaches out there.

@Phil SheltonYou would need a civil engineer to provide a drawing to get submitted to zoning and get a permit if it passes zoning is most common This also depends on the road - if it’s a state road forget it as it will take a year to get approved and cost a fortune - if it’s a local road process not as cumbersome but don’t expect this to happen quicklyIn some instances you may have to prepare sight distances etc to make sure it’s safe to add a curb cut

First you have to face the local municipalities & will be extremely difficult to get the zoning approved. 

Correct, Shelter will be under use group 3, which will need a special permit to be allowed in M1-1 Zoning.

The only slight red flag was that they only accepted payment via Venmo or wire transfer, but that's how I accepted payment when I was selling lead bundles, so I still thought it was worth a shot.

And are there any big red flags that make you walk away from a deal right away?

That time I was looking at getting 201 S Washington (a 5 unit rental) and S Washington wasn't designated as STR and Gettysburg City said that I had to go thru the process of applying for zoning licence which is followed by a hearing with the neighbors as the jury who would hand me the verdict - yes/no.I like analyzing markets and observing them for a number of months/years.