Salaries, compensation, rent, taxes, utilities, fees, MLS, etc.The flat fee model is a recipe for disaster."

Those that cannot weather the storm get wiped out.Having cashflow positive properties provides a margin of safety you just do not have with negative cashflow.Why are you focused on buying in your backyard? 

We look at things like safety, unemployment, schools.

That in mind, I wouldn't chase these deals, especially if you are in "growth mode". 

-Structural (foundation, wall, ceiling and floor)-Roof and Exterior(Roof Condition,Gutters and Downspouts, Siding, Windows and Doors)-Plumbing (Water Pressure,Leaks, Drainage, Pipes)-Electrical (Wiring,Outlets and Switches,Breaker Panel, Lighting Fixtures)-HVAC(Air Ducts, heating and cooling)-Water and Moisture Issues(Attic, Mold and Mildew)-Kitchen and Appliances-Bathrooms-Pest and Insect Problems-Safety Features

Later on in your investing journey the safety and low management of expensive, appreciating properties will become appealing.

Instant equity creates a margin of safety.

Than learn with that safety net until your ready to take things back over to self-manage again. 

The flyer you linked is about food safety rules by the Department of Agriculture and states they only allow true service animals in food establishments.

I don't think you are going to be able to get insurance for two separate living units in a single-family when they are both illegal and likely do not have the correct egress windows (basement) for fire safety which could subject you to huge liability if something happens to either party.