My biggest concern is you actually have a good deal and inconsistent data raises red flags.  

What does zoning look like in that area?

You’ll need a homestead exemption, operators license, etc. for residential, but it’s a little easier to have multiple STR’s in commercially zoned areas.

The lot is zoned RC-I but is next to several RC-II properties. 

Then of course if you do lock down a deal you've got to have a crew you trust and you have to understand what's going on enough to recognize any red flags the crews/pm may present.

There is likely a mix of demographic and cost / growth problems going on.2) Be very careful about regulation (particularly in zoning).

However if there any red flags or things come up, he does not know what he should look out for?

In Long Beach in particular I've heard of many investors adding ADUs to properties that are already 4 units which is totally allowed but what I've heard from some appraisers and other lenders is that these will continued to be valued on the sales comps approach according to whatever the property is ZONED for. 

However, having a low credit score is a red flag to lenders.

And which areas are war zones, if you don't mind sharing?