In my experience the CA income tax is a total red herring.

For example, if you buy a primary residence at duty station #1, live in it for a couple of years, and then rent it out when you transfer...You could then buy a second primary residence at duty station #2 with your remaining VA eligibility (which will be reduced by the amount used to guarantee house #1, and comes with a ton of red tape). 

If someone is guaranteeing no risk whatsoever in a particular investment class, that is a huge red flag.

The fact that he is reluctant to deliver it vacant may be a big red flag that the tenants are going to be very hard, if not impossible, to get out.

@Jeremy Christ The shop front being vacant is a red flag for conventional commercial loans, plus the loan amount is very small for commercial financing. 

What are some characteristics I should look for and characteristics that are red-flags?

This is a huge red flag and I would never agree to it.

BP has a book on long-distance investing, and there a few players in your area who are doing this successfully.

I've done my due dil with search engines, but I was wondering if some smaller players could be more attractive and not necessarily visible on the web. 

Some municipalities, including the one I live in moved to a more market price based approach to valuations.In my town the real estate market is red hot.