As a local investor, do you have any recommendations / preferences given Philly demographics / zoning laws? 

The additional people in the rooms in the basement might be a zoning violation.

@Heather DickisonBuying a house that's been converted to units is really a good strategy, but you've got to do your homework on the property and get a contingency in the contract that says the zoning is conforming and the work that was done was permitted. 

My question is, is it a red flag that investors are flipping and not BRRRR'ing.

In the GTA, I was thinking about getting a SFR home in a good school zone and having the basement turned into a separate unit.

I had it listed for sale and someone purchased it zoned as commercial.What was the outcome?

Things I learned in my first job that have continued to prove valuable today: underwriting, managerial accounting, private equity deal structures, what a side letter is, what investors want out of deals, what a K-1 is, why real estate is a valuable investment class, what asset allocation is, where to find tenants, what cam is, how to handle Capex items in sophisticated underwritings, loan docs and negotiating terms thereof, understanding a lease, what an estoppel is, what a phase one and phase two are, how to read a PCA, basics of land use and zoning...Oh and best of all, I got paid to learn all of this stuff.  

I have seen a retrofitted single family home with a zoning change, which did require ADA compliant modifications; the same was not true for a large single family home with traditional zoning being operated similarly).

Tax records say that its zoned R3 and from my understanding that means single family or multifamily residential. 

If you are inside the city you have to apply for a zoning ordinance that will allow for STR.