He was getting ready to send about $4,000 via Zelle to someone but luckily his gut feeling was telling him something is wrong.

I may be wrong, but I'm pretty confident this is the case.I suggest just applying the full $200K toward your down payment. $200K is 20% of a $1M home; how far away are you from qualifying for an $800K loan?

I think during the summer you can't go wrong either way, but during off season places targeting couples might have better occupancy?

Gaining a conditional use permit can take A LOT of time and the zoning office doesn't like people telling them they're wrong.3.

Gaining a conditional use permit can take A LOT of time and the zoning office doesn't like people telling them they're wrong.3.

I see a lot of DST info and offerings but the TIC offerings seem to be scarce, maybe I'm looking in the wrong places? 

We don’t know anyone in the area, but you might want to read our series about “How to Screen a PMC Better than a Tenant”, since selecting the wrong PMC is usually more harmful than selecting a bad tenant: https://www.biggerpockets.com/member-blogs/3094/91877-how-to-screen-a-pmc-better-than-a-tenant-part-1-services-and-processesAdditionally, don't treat property management like a commodity and just focus on the lowest price!

If you do something wrong or hide an issue an agent won’t protect you.”

So would it be safe to assume the longer the houses are sitting in the tax auction, the more likely something is wrong with it. being that investors with a lot of on hand cash would’ve/may have picked it up already?

Not only are there fewer friends this way, but it takes much longer to get to where you want to go.Trying to ride just one bus, and expecting to get to that magical destination, is hard and expensive...and you as you notice all those other buses that pass you as you walk, you start rationalizing that they are too expensive to ride, and they all are probably going to the wrong destinations,...even the ones that are clearly marked that are going to where you want to go.Second, the answer to your main question, is "both".