Strategy to Best Leverage VA Loan for Rental Property (Socal)

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Good morning everyone!

Two years ago I purchased a home on a VA loan with 0 down.

Recently, IRRRL'd my primary residence (single family home) to reduce rate from 4.5% to 2.25% with the intention to transition this property to a rental property when I purchase another property in ~9 months. Appraisal was $375k, current loan is for $360k as I wanted a $0 out of pocket refinance.

Previously, my plan was to save up 20% for a conventional loan for a new property ($700k). However, I am hesitant because my goal refinance out of the VA loan (current home, 375k) into a conventional loan once I had 20% equity in ~5 years may require me to increase the interest rate significantly above 2.25% (depending on the market in 5 years...hard to predict but almost certainly will be higher).

Another option would be to be to put $60k into the current residence to reach 20% equity, in order to refinance my VA loan into a conventional loan which would likely have a similar interest rate of at least <3%.

This also allows me to use the VA loan for the next purchase- as there is no cap on the current VA loan, my goal would one of the following:

1.) Purchase a duplex, rent one unit and house hack.  In this case, I do not wish to purchase a duplex that needs work as I would need immediate renters and would want a turn-key duplex. However, most units I am finding are in an area that I desire are ~$1.2 million.  To fit my time frame, my down payment will be ~7%.

2.) Purchase a house that needs renovation, move in, renovate while living in the house, IRRRL refinance with increased valuation, save until I can pay off 20%. In order to save for renovation costs, downpayment likely ~3-5% (unsure if offer is will go through with little earnest money). Likely purchase price 800k-1M- will require higher payments but can be doable even without house hacking.

The third option I am considering, as previously listed is to purchase a property for ~700K on a conventional loan, refinance VA loan in 5-6 years into conventional(once 20% equity has been reached), and then use the VA loan for the next purchase.

Thoughts?

TIA!