Once they are stabilized, he refinances at 75% LTV to pay back the investors and have extra capital for the next deal. 

Also seems like this lender is trying to swap the DSCR loan rate issue to the property tax & insurance issue to make their product look better.BTW: we're in the Midwest and believe it offers better opportunities than TX market, but one shouldn't have to stoop to this lender's tactics to show this:)

If your in a position to put 25% or more down on the purchase you can get very favorable terms on a investment product. 

My thinking is to initially give a 2 or 3 year interest only loan to my REI company. 2 to 3 year should be enough to purchase, rehab/improve and stabilize the property. 5.

Are there insurance companies that offer a product like this?

I take it there are no other VA products similar to the Vendee Loan for non-veterans looking to purchase VA Foreclosures?  

Of course, if you refinance your first VA loan into another product, that would certainly clear up the issue. 

Jude Children’s Research Hospital provide economic stability and job growth, attracting residents and supporting the housing market.

I think it will answer a lot of your questions.https://store.biggerpockets.com/products/first-to-a-million

STR is a fun one- you'll get to have some fun and get creative with your product.