If there is no problem then the HELOC will provide more flexibility since the cash out re-fi may yield more proceeds after improvements when applying the 70 or 80% LTV limit whereas you might get improvement proceeds from an investment loan but you won't want to because there will be a lot of red tape, inspections, draws, lien waiver compliance and a lot of other crap they load onto improvement loans on investment property.

There is so many "red-flags" here I am not sure where to start..... - you state it's an "executive" townhouse.

I’ve seen people hit a wall with red tape when trying to remove secondary kitchens or bathrooms.Finally, make sure the math works out.

I saw their rating go down and should have taken that as a red-flag.

Google LLC announced Aug. 15 plans to invest more than $1 billion in Texas this year, its latest strategic goal focused on supporting cloud and data center infrastructure.Some of that investment will go directly into the technology giant’s data center campuses in Red Oak and Midlothian, both south of Dallas, which are helping the company meet the increasing demand for cloud and artificial intelligence services.

That is why club houses, fancy mailboxes, flag poles, paved roads and beautiful signs are not to be considered. 

If you do research ahead of time, what are some red flags that would cause you to back out of a deal or add a couple thousand to the deal cost for legal battles/ cash for keys?

Rule of thumb is: Red states = landlord friendlyBlue states = tenant friendly. 

I had an applicant years ago that got a random $10K deposit and that was a red flag to me.

Rentometer can be handy here.Vacancy Rates: High vacancy can be a red flag.