Q1. Is sentence 1 grammatical?
Q2. Should the relative clause be positioned closer to 'reason', as in sentence 2?
There are many reasons to avoid alleyways at night, not least of which drug deals often occur in such places. There are many reasons, not least of which drug deals often occur in such places, to avoid alleyways at night. Q1.
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Q1. Is sentence 1 grammatical? Neither is correct.
The long form of what you are saying is this.
There are many reasons to a