I definitely ended up passing on this "deal" based on the red flags.

@Ryan Knoetze As far as I know, these are the areas (in red) https://cdn2-img.pressreader.c...I just read some news saying they are now allowing new AL licenses BUT only for 5 years, after that they will re-evaluate them and decide wether you can keep them or not.Also, regarding taxes, if you apply for an AL license you should declare your rental income under category B, this type of activity receives a special treatment under the IRS and tax is calculated on sales, in other words you are only taxable on 15% or 35% of your invoiced income, depending on the way your business is structured.Capital gains are not charged if the property is more than 30 years and you refurbished it or if it is located on an urban rehabilitation zone.

@Natalia Perlova if the switch is in a common area and you are having trouble with the tenant especially if you think they switched the burner off deliberately (it should be a bright red switch plate in our area labeled oil burner).

In the recent election, over 50 counties flipped RED.

I'm looking forward into developing my roots in the community! 

The red flag here for me would be the willingness to overpay when they’re not bidding against anyone.

You can only play games for so long.Chances are your next door neighbor is an IRS agent and turns you in when your tenants blocks their drive or some other random event disturbing your IRS neighbor.ADU catches fire and your insurance won't cover you, because it was an illegal and unpermitted structure.The city inspector told the last guy not to build or rent it, and is now pissed and wants to make an example of you and just red tags the whole property and no one can occupy for the next 1-2-3 years while you wait for a hearing.Then when you get the hearing, "staff" recommends you tear the whole structure down, and if you still want an ADU, you can apply for a permit and rebuild it.Your tenant quits paying rent and won't move out and you can't evict them, because there is no valid lease and they're just your "roommate".Probably a dozen other bad things can happen to you when you do stuff like this. 

Smoking cigarettes is also quite legal, and also prohibited under the lease.I think your argument on unit count is a red herring here. 

It’s all about finding a balance between purchase price, financing terms, and smart rental management so you’re not forced into the red.

Also, real builders/experienced developers will often have a true technician, i.e. a civil engineer, architect, real estate attorney et al at least glance at the property info to make sure there are no major red flags.