Trust me if your tenant cant afford renters insurance that should be a huge red flag for his ability to pay cover his rent in general.

Also when you say "I only want a blue car", and you ignore the hundreds of red and yellow cars that are available, you make life very hard for yourself.

@Ryan McGrath I think your first concern is to make sure it's a legal rooming house or to understand the steps that it will take to make it one - which I'll bet would include things like extra egresses and a sprinkler system.One incident / phone call / police visit where word gets back to the building inspector and you might find a big red "VIOLATION" sticker on your front door.Next, I'd want to do some forensic accounting. 

Here's some posts I've written to help Bay Area investors like you get the pulse for what's going on in Sacramento:https://www.biggerpockets.com/forums/621/topics/396725-millennial-migration-to-sacramento-2017---here-comes-the-rushhttps://www.biggerpockets.com/forums/621/topics/586279-investing-in-sacramento-or-stockton-which-one-is-betterhttps://www.biggerpockets.com/forums/621/topics/585796-sacramento-rent-control-101-everything-you-need-to-knowhttps://www.biggerpockets.com/forums/621/topics/590913-rent-growth-in-sacramento-is-triple-the-national-averageRegarding Oak Park, here's an article about the gentrification and some of my thoughts on it:https://www.kcet.org/shows/city-rising/the-gentrification-of-sacramentos-oak-park"A new mural rests on the outer red brick wall of Arthur Henry’s Supper Club in the North Oak Park area of Sacramento.

So even if you think you are cash flowing every month, you are likely in the red. 

It's a big red flag in my opinion If he can't clearly answer the question.This is outside of your question, but in Massachusetts a business cannot represent itself in any court besides small claims court.

I've learned a lot from listening to others (and some past experience including buying my own house at foreclosure) but worried that I'm so anxious to do a deal that I'll overlook red flags.  

The house I have is in a red-hot area, usually homes going under contract within 2-3 days (or less) of being on the MLS.

The house I have is in a red-hot area (Idlewild Rd), usually homes going under contract within 2-3 days (or less) of being on the MLS.

I did not get an inspection or disclosure, But  the broker and seller intentionally not mentioning a major issue with the sewage system is a problem no matter what, The broker was representing me an the seller, which is a red flag as well.