With conventional financing, your income, DTI and employment history will be used to qualify you.

Assuming the buyer can qualify for conventional financing and your numbers are accurate (which I suspect if I was purchasing my value add cost would be higher)  They purchase at $400k.  

Conventional, however, will allow the home to be classified as a primary residence, and for the veteran's income to be counted for DTI purposes, if only the spouse moves to the home for now. 

Hey Shai, Are you looking for DSCR options or Conventional financing?

If I were in your position, I'd go the 5% down conventional route that Fannie Mae recently introduces for owner occupied 2-4 unit properties.

It's not uncommon for buyers using FHA products to face rejected offers or the need to significantly sweeten deals to compete with those favoring conventional loans.

Regarding commercial lending they are usually less interested in you, and more so on the property itself, unlike residential owner occupied “conventional home loans.”They will look mostly at DSCR, and LTV.

More on DSCR loans loans if you decide to go that route: DSCR loans won't use your income to underwrite the loan which is what conventional loans will use to underwrite the loan.

One of these properties is in the Hilton Convention Center Hotel.

Because you will have the same issue with any financed offer regardless of VA, FHA, or conventional financing.