In other words, going an inch wide and a mile deep is a way better use of time than the opposite.

I.e. you can only use 3 out of the 7 material participation tests to qualify the group.There is nuance involved and I would highly encourage you to have a deep conversation with your CPA before you start making business decisions surrounding this. 

If you want to learn the GC life do it on your next deal where there’s not so much paperwork and red tape.

I would like some advice on red flags to look for, questions to ask the inspector, and general advise on a fixer upper I am considering. 

Prices now for lower level 4plexs now are 280-300k, and still going up.All over Las Vegas prices red hot due to low inventory.

Huge red flag and guaranteed trouble.

No big deal but threw up a red flag.

Getting a variance to change the zoning can be a lot of red tape and hassle that we don't feel we need to deal with on this particular project.The 2nd/3rd floor apartment is a large 3bed/2bath townhouse style apartment. 

I lived it as a HML in that market as well as other cash flow markets of the deep south.. if they did not crash I would not have ended up owning 200 plus homes that I foreclosed on. some markets held better.. our little portlandia saw a 15 to 20% lower of the median.. and in the high end over 1 to 2 million it crashed 50% or better..

If a deal just looks "OK" I  will still play with the numbers to see what my break even point is and what would have to happen to get there - if there are too many red flags then I walk away - there are still many other factors that I will look at such as location, age of property, type of property , local comps, ARV , potential add-ons  and other factors that would affect the cashflow and/or resell value.