For a conventional mortgage, at closing, the lender wants you to maintain a homeowner's policy and so I'm trying to understand the consequences of changing the policy post closing. 

There really isn't cash flow anywhere right now without some kind of niche or angle.If you buy a miscellaneous, "lower cost" house around the median in PA or OH, and put conventional or DSCR debt on it... it's not going to cash flow.And you really need to be hands-on somehow, whether that's literally your own or a trusted team. 

The issues we ran into were being pre-approved for a mortgage much lower than what most houses in our area are selling for, and finding houses that were in our price range did not qualify for conventional mortgages.

I think you just have to follow any leads you can and bang on a lot of doors.In the meantime, though, here's another possible strategy:Do a conventional Homestyle rehab loan (you would qualify for less, but it wouldn't be THAT much less), and once it's all fixed up, re-fi into the VA loan.  

For example, offer landlords a tax credit for new units brought to inventory in ___ area.

Refinance to a conventional loan.Use approx. 6 months to save for down payment and look for the next property to house hack.

The borrower was overqualified, the property was cash flow positive, I approached a local lender and due to the strength of property and borrower they provided essentially conventional terms of 25% down on a 25 year amortization where as other investors could only consider the transaction as cash. 

Conventional financing requires 12 months of seasoning.

If these wholesaler want to get paid they need to get a license and go work for a brokerage or they need to have their own money buy their inventory Then start marketing it once they own it..

The majority of investors have utilized low down payment conventional mortgages, or DSCR loans and the majority were able to secure seller concessions between 1-3%.