Usually I have learned that paying an upfront fee to lenders is a big red flag - so what's the deal here? 

Pete aren't highly rated so targeting families at a higher price point for single family homes doesn't seem possible to me at the moment since these house are more expensive and most families will commute to private, charter or magnet schools so location doesn't mean as much.

Whether intent is there or not, you will be accused of redlining if you spin "red yellow green" or similar color coded market maps to identify places to invest or move.  

It was ok for a newbie like me at the time however it was horrible.  

There have been quite a number of red flags and warnings in this thread and many of your responses tend to be, "but what about this and this is why that is" leading me to believe you have already made up your mind that moving forward is a good idea so I wont try and change your mind but again, warn you that some things in this syndication are outside the norm and the promised rates of return (STR's in the package included) are abnormally high leading me to believe that the investors will have a much higher chance of disappointment than satisfaction.

i'm having a hard time to get a lender to get me at least $50k HELOC. 

There were some red flags during the acquisition process but their PM team has proven to be flat out mediocre. 

While a low fund isn't an automatic red flag, it's definitely something to look deeper into.

I carry my phone with me at all times, and approve all requests within a few minutes if I can.  

Every unit is safe and would pass inspection, I'm just getting screwed by government red tape..