It can depend on what municipality a property is in (City of Charleston, County or a different muni like Town of James Island) and if there are further rules imposed by any HOA that the property is governed by.

Anyone knows of any local rules in Trenton NJ preventing/governing this?

Study different markets, learn about the local economy, employment rate, population growth, vacancy rates, major employers, city’s development plans, property prices, government rules and so on and then take an informed decision.

unlicensed activity because its so prevalent these days is just starting to hit the radar screens of the regulators its going to get tougher..

Different attorneys will tell you different things, which is truly a shame, but if your partners are completely silent and are expecting a return, then you are walking on the line of a syndication with comes with additional sec regulations.

I mean, should I apply for a modification permit from the city government?

Since the governing MLS in the area (some are owned by the local Realtor associations and some by private parties) don't have the listings, many of the local agents don't see the listings and thus competition is reduced (so the argument goes). 

Not interested in Tacoma due to new Seattle like regulations..Killing me.

Since it’s not regulated like a std residential mortgage, everybody handles their products different.For some, it’s okay for beginners and it has a higher interest rate than their std hard money loan.

First, check local laws and regulations about any restrictions on rent increases.