Here is a brief explanation of Passive activity loss:Passive Activity Loss Rules: A set of rules that prohibits using passive losses to offset earned or ordinary income.

I still don't think I would take his same direction, but I have no problem with him taking it as I think he at least stated a more complete explanation for his original post.  

The reason for waiting 6 months is because you will need new appraised value.When you're moving from an SFR to a Multi-Unit you need to have an iron clad LOE (Letter of explanation) especially if the unit is smaller.

I am having trouble finding a good explanation of what constitutes closing costs.

To add to your excellent explanation, Before I knew about the VA IRRRL I was going to actually incorporate the VA fundiing fee to the loan which would cost me even more because interest would be applied to it.

Your best bet when it comes to finding good, quality advice is to solicit it from people who are making it happen in your geographical area since REI is so local.  

wow, thanks, @Chris Mason for the explanation.

See how the real estate cycle and geographic area affect prices, rents and cash flow??

Hi Shawn, thanks a bunch for the explanation. 

That explanation really helped and now I'm going to place an offer this week!