She submitted an application (incomplete, and that in itself is a red flag, short rental and employment history, but not overly so), but preliminary check through the local courts shows no issues or criminal record. 

If I have 5-10 potential clients (5-15 apartments), should I consider hiring a lawyer or investigating the developer's reputation?

As opposed to investigating and asking questions beforehand.

Sounds like you should investigate the things said by the one guy who directly answered your question. 

Surely there are living situations with 3+ college students living together...anyway, I wouldn't do anything illegal but investigate further to see the details/loopholes around that law.

Starting my preliminary search of the city, neighborhoods, zips, and surroundings areas to narrow my search and plan a visit with my local relator soon.What areas and neighborhoods would you suggest I search in?

If I'm making an preliminary offer based on ARV alone, I let them know that this offer is pending my inspection and that if there are repairs needed the price will need to be renegotiated based on those repairs, since I'm buying as is.

If you are going to play the trustee sale game, this is the hardest part...A preliminary title search would have revealed any outstanding utility liens.

Investors are hiring private investigators to obtain information on the syndicators before they commit to any large investment amounts.

From realtors in the area, and doing preliminary projections on airdna.