I wasn't sure if asking my FHA lender about switching it to commercial will raise red flags.

Look into Rooted - they are sent properties all the time.

I know, there are plenty of red flags there, but I do believe it is worth the risk when I consider how happy it makes my wife, how life-changing it will be for the family, how minor the financial impact will be on me, and how it gives me the opportunity to practice the steps of real estate investing with forgiving tenants.Finally, I am going to attempt to self manage as nothing comes close to cash-flowing if you include PM costs.

One of the biggest red flags I have as a lender (who lends my own money as well as secondary market loan) is when a rookie tells me there goal is to buy 10, 20, whatever properties in the next year. my next question is how many do you own currently?

Gaps in rent payments or undisclosed tenant issues should have been red flags.It’s good to see the OP trying to help their client navigate this, as acting promptly is critical for any chance of recovery.

People probably do this all the time, but skirting the law and subject to red tag if the city finds out. 

On the other hand if they are a sponsor that is experienced in stopping a skin in the game, that's a huge red flag for me.c) how open to scrutiny are they?

Housing shortages have more to do with boomers living longer and holding on to their large homes and provincial red tape.

The property is a duplex with an ARV (after repair value) of $700,000, making it a strong deal.However, I want to ensure I’m not overlooking any potential red flags.

A common strategy used by investors, such as those operating through PadSplit, involves purchasing the property, completing basic rehab, refinancing, and then using cash for the interior build-out.Another potential red flag, even without converting common areas, is the addition of individual locks on bedroom doors.