New Construction Financing Strategies

[Lance Wolfsmith]

Good afternoon everyone,

Over the summer, I purchased my second home for $750,000 0% down using a VA loan. The home I purchased is in San Diego and is zoned to allow 3 units on my property. Due to the size of my lot and zoning restrictions, I can build up to a 3600 sq/ft duplex comprising of 2 3bd/2ba/2 car garage units expecting about $3,000-$3,200 in rent per unit.

In order to make this purchase, I refinanced my home in CO from a VA loan to conventional loan to free up my VA benefits. I currently live in the existing house but plan to rent out the entire property down the road.

I am active duty military, have good credit but limited personal funds available, and the equity in my CO home is around $140,000.

My question is what is the recommended strategy to finance new construction of my planned duplex on my existing lot. 

Once construction is complete, I intend to refinance the property back into a conventional loan(hoping the construction adds enough value) or back into a VA loan.

Any advice is appreciated, thanks!