One of my friends has just pooled 2M in funding for fix and flips specifically for phoenix arizona to cover full deal acquisition.

Based on my experience, I strongly believe that investing in a Hollywood property with a pool can provide the best overall return on investment (ROI) and speculative value growth in the area.

There are some differences for sure but I don't think they are substantial.3) What laws should I watch out for (for example am I allowed to have the water/electricity be under the tenant's name) - You can put all utilities in the tenant's name, but I would advise keeping water in your name since that utility is a lien on the house itself.

I think you will find the same if you rent your house by the room assuming you have a decent sized tenant pool.

Doesn't matter if the municipality for property taxes or utilities (usually water or perhaps sewer), lender for a mortgage, or even a condo association for HOA dues...As for the OP, I'm not sure I understand all of this since I don't do it. 

Unless it is at rough in stage it will be compromised unless this has no interior walls, what's the rest of the story and why does it need overlayed( which is what you are suggesting) or removal which has issues of its own with load walls unless all interior walls, cabinets etc are gone. sounds like a raw deal with water issues or structural issues?

Welcome to the deep end of the entity pool @Richard Sherman ! 

Is the $500k home in town on city water / sewer ?   

Risk:Retirement communities often enforce age restrictions, thereby limiting the potential tenant pool. 

Many OOS investors set themselves up for failure because they don't truly take the time to understand:1) The Class of the NEIGHBORHOOD they are buying in - which is relative to the overall area.2) The Class of the PROPERTY they are buying - which is relative to the overall area.3) The Class of the TENANT POOL the Neighborhood & Property will attract - which is relative to the overall area.4) The Class of the CONTRACTORS that will work on their Property, given the Neighborhood location - which is relative to the overall area.5) The Class of the PROPERTY MANAGEMENT COMPANIES (PMC) that will manage their Property, given the Neighborhood location and the Tenants it will attract - which is relative to the overall area.6) That a Class X NEIGHBORHOOD will have mostly Class X PROPERTIES, which will only attract Class X TENANTS, CONTRACTORS AND PMCs and deliver Class X RESULTS.7) That OOS property Class rankings are often different than the Class ranking of the local market they live.8) Class A is relatively easy to manage, can even be DIY remote managed from another state.