If I got a home equity loan for Property 1 and used the proceeds as downpayment for Property 2 and then got a 2nd loan for the remaining 75% purchase price for Property 2, when I sell Property 2, can I use the Property 1 loan as part of the cost basis for computing Property 2 capital gains?

Combined income is 3X rent.

I doubt he'll be able to quality for a loan (VA) with just his income. 

Findlay is a real oppotunity beause you’ve got a combination of stable job sources, a decent population size, and often lower acquisition costs compared to bigger metros.About choosing an agent..

Its a tiny loan for any institution.You'll have to get hard bids from a local GC, but maybe $110/ft?

If you're able to save $50-100K per year for 14 years (when you're 40), a combination of getting solid deals, paying down debt, and having a target goal of income vs expenses, it's definitely doable.  

For example, I mention that every adult must pay a $30 application fee, pass my credit/criminal background, make a combined income of 3x the rent, and whether or not the property accepts pets.

Private mortgage insurance i believe is not charged on va loans.  

And you have to pay PMI for the life of the loan.

I will take that over 200.00 a month positive cash flow :)  All the while running my Capital Partner business and funding over 120 deals a year for my hand picked clients. lThat's a nice combination.