Continue with the purchase of the current home, because it could take you months to come to an agreement on the short sale.

Local market rents suggest that units this big with these amenities should go for minimum $700/mo, max $850 if higher-end renovations done (too expensive for most potential tenants in this neighborhood).

@Teren Cooley get a signed purchase agreement take it to a title company.

As a side agreement, we are asking him to convert part of the house into a single-bedroom ADU post-sale. 

Home Possible not only has minimum income requirements to qualify for the loan (with DTI), they also have income CAPS which LIMIT the amount of income you CAN make in order to qualify for the program. 

Wherever you form it you will very likely be paying the California franchise tax minimum of $800 for each LLC.

@Rory Samuels You can only use the VA loan for a property you intend to live in for a minimum of 1 year.

I say you can expect minimum 3 years tenancy on average

The listing for the house states that it comes with washer and dryer but the seller’s changed their minds after the original agreement was signed to no longer include it because “they still owed on it”.

If i can purchase from the seller what are some things I need to be sure of in the purchase and sale agreement?