Need Advice: VA vs Conventional Loan

[Merin Porter]

Hello everyone, 

I have a somewhat unique situation and could really use some advice from seasoned investors. My husband and I are looking at purchasing our first investment property. We currently live in Texas, and the property we are looking at is in Colorado. Here are a few of our considerations:

• My husband is a veteran. This will be our second home purchase, and we have our full VA loan entitlement available.
• The property we are looking at is almost three acres, is zoned multifamily (hard to find in the area), and has three units on it: one stick-built home (3/2); one garage apartment (1/1); and one mobile home (3/2). Two of the units are currently rented (actually, under-rented) for $2400 total. The third unit (garage apartment) is currently unrented. These are detached, rather than attached. 
• Two of the units need cosmetic updates, but are livable.
• The property has been on the market, all-told, for about four years. This is mainly because it's been overpriced and because it needs some updates. The seller has indicated they would be open to the idea of seller financing.
• I am a salaried employee; my husband is self-employed. We are planning to move into the stick-build home to use it as our primary residence. This means that we will be moving to another state. My husband travels for work anyway and so his income should remain about the same. I will be freelancing for my current job, but anticipate switching from a W2 to a 1099 employee. (This has been a concern for some lenders.)
• The VA doesn't want to touch the property as long as the mobile home is on it. Our realtor has suggested having the seller move the manufactured home off the property while it is being appraised and closed on. The cost of doing this would be about $10,000, plus they would need to relocate the current renters/possibly compensate them a month's rent for their trouble. My realtor made the point that if the seller concedes this on moving the mobile home, that will be money they probably won't concede elsewhere in the deal (like by lowering the purchase price, etc.).
• This would be our second purchase with a VA loan. We will offer $600,000 on the property and would put 5% down, so our funding fee would be 1.5% ($9,000). But we wouldn't have to pay mortgage insurance. We have been quoted a 3.875% rate.
• Another option would be to go with a conventional loan. We could put about 10% down. We've received a rate quote of 3.625%. We'd have mortgage insurance for at least two years, but we wouldn't have to move the mobile home. 

So, my bottom line question is, if it is going to cost us a $9,000 funding fee plus $10,000 to move the mobile home if we go with a VA loan, is there any scenario in which this would still make sense versus a conventional loan with PMI? My head is swimming a bit here, because I've always considered the VA loan the best possible way to go. But am I wrong? Have I finally encountered the situation where conventional would be better? Or is there another kind of loan or creative financing we should be looking at?

Sorry for this really long post. I sure would appreciate any input you could offer.

Thank you so much!

Merin