I learned this after I did some more research. 5k on 100k LOC is really good when you compare it to a hard money loan, however, the damage it will do to your credit score short term is too much of a risk for me. 

Comparing Houston and NOLA is apples and oranges.

We plan on considering the side work (GC and design stuff) to be taxable wage income but that is minimal compared to the profit we receive from flipping.

(See RCW 59.18.070)If the tenant is on month to month or does not have a lease, you could give a 20 day (at least 20 days) written notice (prior to the end of the month or point that payment is made) that the tenancy will be terminated.

Do you think the higher return outweighs the risks (such as crime, vacancies, and maintenance expenses) when compared to a property in say downtown or midtown Sacramento which seems to me a pure appreciation play right now?

What information do I need to find out prior to buying if I can build condos in this area by demolishing old building?

Compare it with what you have and how much you project to make. 

I would have a lender lined up prior to purchase who would be willing to cash out refi on the property.

Ask around and compare to other similar associations.Then I would see if these reserves are adequate in light of the real needs of the place.For example, does it look like the place has some major capital costs coming (roof, parking lots, windows/doors, decks, HVAC, siding, grounds, common areas, etc)?

Also I think if I compare equal amounts of hard work at my job vs. running a real estate investment business, I will make more in the latter.