Puerto Rico offers a 40% tax credit for tourism projects. The smallest of these would be a bed & breakfast that can be as little as 3 rooms. (3-5 rooms total) Host must live on site, and breakfast must be provided. There are many other requirements, but it seems like in theory you could use your VA loan to buy a 4 unit building, live in 1 unit, STR the other 3 and receive a Puerto Rico tax credit (which can be sold to high income earners for between 70 to 83 cents on the dollar) for your purchase, rehab and 1st years operating costs.
It is a lot of paperwork and compliance. I got halfway through it once (then sold the 4plex) and am halfway through it a 2nd time on a more expensive building. If I had to do it again, I would personally not do this much work for a 4 plex, I would do it on a bigger hotel project. But you are limited with your VA loan to 4 units or less. So in theory, I think this is possible. I do know several active military members here who have used their VA loans to buy 4 units and they are doing STR very successfully. They are not using the tax incentives. If you do down this route, it is critical to meet with Tourism *before* your purchase. And this is not legal advice, lots to explore on your own if you do this.
