I've been shocked to find how many groups offer "success" stories, but when you do some independent research, red flags pop up. 

Purchase price: $365,000 Cash invested: $1 4 Unit, 3 bed/1 bath.Older brick building next to a little park.In Shaw near restaurants, MO Botanical, Tower Grove Park.

Believe me, the extra $15-20k you'll pay for a B prop will come back to you ten-fold in lower turnover, lower move out costs, lack of Section 8 red tape, and general peace of mind.

I would first consider if you are truly cash flowing on the property or if your taxes, maintenance, management fees, and cap ex savings are going to push you into the red. 

In their "cashflow" calculations in their proposals, they did not factor in vacancy costs, which was a bit of a red flag since that and if you factor in maintenance costs, does make the cash flow net NEGATIVE.5.

My question is, what is the best way to do this to not throw any red flags with lenders?

The mere fact that they are asking you to deviate is in itself a major red flag.What you need to do now is just evict this scumbag.

That means you're entitled to all the benefits of an employee.This is a little bit of a red flag to me as it suggests the employer is playing fast and loose with the rules.

I feel its better to do this , than deal with all the red tape associated .

But I'm seeing some red flags here.Bottom line, I would be unlikely to do business with anyone who doesn't have at least some skin in the game, ie money.I'm not even understanding what Small Business Guy has to offer.