Good camera system so you can see the property fully.As part of your due diligence, make sure you understand the market capacity, zoning for Self Storage- allowed and conditional, how easy or hard it is to build within 1 to 3 miles of you, if in a city. 

It is in an AE flood zone with a BFE of 22 feet.

My first action step is to determine which zone codes would be best for this.

Alpine Lake is in Pocono Township, which only permits STR in commercial zoning districts. 

My thought is that the sellers (currently estate managers as owners have passed) would be motivated to move quickly if we take the tenant problem off their hands.Now, this probably raises lots of red flags, potentially even prompts some laughter at what a terrible it is, which is why I'm here asking!

Purchasers of a property to be used as their residence seem to be more adverse to flood zone properties than investors.  

The county/city zoning board has said this unit is not an issue and is grandfathered in, but he's worried about the more stringent FHA appraisal/inspection3) Buyer "skin in the game" - doesn't want to be left holding the property again as this has happened to him at least twice on previous land-contract/CFD arrangements4) Ability for buyer to acquire traditional financing at balloon5) Effective total cash to the seller is a primary driverWe submitted an offer that solves all these problems:Property A:Purchase price: 360k using FHA loan, owner-occupiedProperty B:Purchase price: 305k, 0% down, 25 yr amortization, 5 yr balloon, 4% interest rateNote + mortgage arrangement with professional loan servicing/escrowAssuming a 9% annual return in the stock market, this arrangement is equal in total cash to seller (including accounting for inflation,etc).

Is this a huge red flag?

I trust my realtor, but I still need to ask - can anyone think of any offer stipulations that would be red flags that the realtor cares more about closing the deal more so than getting a good deal for us as buyers?

I am in the North Charleston area and a real estate agent... some seem like great deals but it depends on current condition, zoning, loan options etc.