If you go into Central or South Scottsdale (Old Town) $1M will buy you a smaller, older home, OR half of a big, remodeled home (as alot of the Arcadia and Old Town area are turning over old small homes to be big beautiful homes in the $2.5M range and higher).There are options.....for both buying and renting, that would work with your situation.By the way....it's 51 degrees in North Scottsdale right now where I live. 

There isn't a lot of capital besides the small inheritance I have coming.

Possibly break loan covenants and can't cure default, lender takes back property.  

Please fix this small issue and add this option for us!!

I've helped people with SBA loans to purchase real estate for a business, but for buying rental real estate, the DSCR loan is a much better option.

For context, I will be assuming his VA loan at 5.1% and he will be doing seller financing for the remaining equity and sale price. 

Building small units in small counts is expensive development.  

Is there a pre existing loan with that bank with either of you?

@Ashley MierezConsider your margin dollars as well.

Quote from @Vince Scipione: Standard would be an FHA loan for your situation more than likely.