That says huge red flag to me.

I’ve developed a Comprehensive Investor Report (CIR) for a property in Palm Coast, FL, designed to be transformed into a luxury rental asset while serving as the foundation for a scalable asset management strategy.Here’s a quick snapshot of the deal:Property: Red Birch Lane, Palm Coast, FLCurrent Value: $350,000+Mortgage Balance: $165,000Current Equity: $185,000Investment Required: $177,500 (for luxury upgrades and optimization)Projected Monthly Rent: $4,500 with 2% annual increasesTarget ROI: Full 1.5x ROI for investors achieved in 9 yearsLuxury Features: Smart home automation, designer finishes, professional-grade kitchen appliances, and more.I’ve also structured a capital distribution plan with a waterfall approach:8% Preferred Return for investors.Full Return of Capital to investors before profit splits.Post-ROI, a 20/80 split (Investor/Management) ensures long-term alignment.

Red flags yet?

Having developed a majority of my career in CA the regulations and red tape for construction and development are intense. 

I want to give them the benefit of the doubt they are just struggling with staffing but now have seen some red flags that lead me to believe there might also be some type of deceit/fraud and possible financial trouble.

Nonetheless, having it as legal square footage will help your ARV and sales value dramatically vs. having an illegal unit. 

As a matter of fact, the red 4 unit next door is always on Zillow trying to be sold.

The voters in Red States would never allow a national rent control.

Affordable housing is RED-hot at this time, especially if it's decent 3br+ housing sub $2k.   

Way simpler and more protective for everyone for about $30/month.Out of curiosity, will you be at red stick REI in January?