These are business purpose loans so there isn't any sort of red tape when purchasing multiple properties at once or one after another.

I will likely get approval based on my zoning.

Depending how much of the neighborhood is a hot zone for renting rather buying, and which Property type is performing better than the other (meaning 1bd 1ba 2 floor renting out faster and much more consistently than a 2bd 1ba 1 floor), you can make your choice of those factors as well as other ones that impact your decision for what you wanna do with your investment.

That says huge red flag to me.

At a high level, the system ingests raw documents from the recorder's offices, building permits, zoning permits, market data, and other auxiliary datasets.

Let me guess, RH, REDS , ALL S Monument ? 

The licensed plumbers do not get permits for water heaters, I have never heard of one being red tagged solely for not having a permit so I do not get permits (and know no one that does) for swapping a water heater.  

I did all my other due diligence like asking for paystubs, W2s, Tax returns, Employment verification, bank statements etc etc and did not see any red flags overall.

Legal Implications and RisksThere are a few legal and procedural risks to be aware of:Title and Zoning Issues: Confirm there are no restrictions tied to the property.

@Ryan Rubel There are certainly quite a few restrictions in those two areas, in Carlsbad you have to be within the coastal Zone...I have a multifamily in Carlsbad Village a block outside of the coastal zone so I'm unable to operate it as an STR unfortunately.