I tried to verify his creds and everything but no success, the name seemed very generic like first and last names of some famous people in the history.I was offered a fixed interest rate of 4.5% for the 25 years with 10% down and 5% as a refundable fee (Red flag).

Any stipulations, guidelines or red-flags?

Is this allowed or would it throw up a red flag to the IRS as a sale?

It appears FHA looks down there for moisture during an appraisal:https://birminghamappraisalblog.com/appraisal/fha-appraisal-red-flag-water-in-the-basement/Maybe some Appraisers can weigh in on this.

MAYBE if a tenant was a disaster right from the start you could say you want to know if there were any obvious red flags they didn’t see or ignored?

I know you remodeled it, but that is a huge red flag to me.Best of luck!

Not to mention the other red flags 

He also found a roach problem that was not flagged in the inspection, so that has been an ongoing battle.HOUSE HACK #2Investment Info: Single Family Home converted into an over/under duplex.

Seems like that would raise some audit flags, since it would appear at a glance that we have a substantial personal gain that we aren't reporting on our 1040 (even though in fact we would be reporting it on the 1065, which would flow through to the 1040). 

Most of what you said is close, but you can't renovate a unit after there has been a lead inspection or it will get flagged for unauthorized deleading (UD) and you'd get fined and the unit would never be able to get a lead certificate.