At that point, we'll have a better idea of what to hold and what to flip and how where we want to devote our resources.

The fee is at closing and it is a reputable bank not a scam.

As for passive vs active, well, I could devote a few hours a week to it, for research, etc.

But the fact that they misremember clear events that were notable (always in their favor), combined with the fact that they have had no rental history for ten years, and have no furniture, makes me think this is a scam they pull...I will let a unit sit empty or sell if I have to before I ever lower my standards again.

A deal like this will probably need alot of time devoted to it to make sure it's operating as it should.  

The whole time I'm reading that I feel like it's a big scam.

This Due Diligence fee scam is older than most other scams...A true lender will want you to pay for appraisal and credit app.. and or as suggested a small app fee say 100 bucks or so..In my HML days I never collected anything up front..

However, if you're considering paying for education, Google their name and "reviews" or "scam" to see what others are saying about them.

There are lots of websites that claim they will do this for a small fee, but I am worried that many of them might be scams.  

I have found it best to find an excellent real estate agent who believes that your criteria is realistic and is willing to devote significant time to helping you.