Quote from @Luke Carl: You get what you pay for here  Meaning too low cost would be a red flag?

That's a red flag for someone trying to use a business-purpose loan for owner occupancy, so many lenders won't allow it. 

Even though this would also be an equally small loan, banks can't turn those down if your credit is otherwise good because that is considered red-lining which is illegal for owner-occupied loans.

Any red flags or important clauses to include in our contract?

When we bought the place in 2020 this whole room was a deep butter scotch yellow with pine wood stairs, cabinets, and massive furniture (see before photos below). 

Her 6 years as a Property Manager have given her a deep understanding of all aspects of property management.

It's impossible to know without a deep-dive into the condition of the property, the projected renovations, and finance options.But you should still try to answer the question! 

Look more into a long term hold strategy, if I can get an interest rate where I can break even or even go in the Red a little where the house is being paid for mostly by the tenant then I will look towards the appreciation down the road. 

Stock market liquidity and diversity are complemented by real estate's potential for appreciation, tax advantages, and passive income.Before making any decisions, it's advisable to consult with local real estate professionals, including real estate agents, lenders, and property managers, who have a deep understanding of the NYC market.

Where they will tap into the sewer is actually 20 ft deep.