Are there any red flags I should be aware of, such as the vacancy expense or NNN costs?

It sounds like if appreciation is the main goal that will open up different markets for you that will require more capital to gain that appreciation. 

If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee.

Just wanted to share, I've noticed a loosening in down payment requirements for DSCR (debt service ratio loans) that either use the actual or proposed rental income to qualify.

This is an email I just received from their rep:"The initial appraisal cost would be paid by ReadyCap but the expense would be taken from any from the sale/refinance and settlement to release the lien.The plan would be to determine the amount of equity based on the updated appraisal and first lien and then negotiate a settlement with you for the release of the lien.

if you have to demo it all, way easier to have it done vs spending time or money and less surprises.very different project then 20 yr old cosmetic flips and may require a lot more permitting and upgrades since it's all open the building dept may want you to meet current code as much as possible.

Our documents are always up to date with the most current legal requirements and are specialized disclosures are designed to protect the lenders interest no matter what type of loan you are making.

I self managed and used an excel sheet to record all income and expenses. 

Should I require both of them to pay application fee or only one fee?

What goes around.....I, personally am trying to forgive and move on hoping that I have enough years remaining to attain to that forgiveness because I know it's required of me if I expect to be forgiven on the "other side".This has been a tremendously humbling and humiliating experience (me writing this) and I am sharing this so that possibly others may be spared the experience and I hope this missive is timely enough to accomplish some of that.