Welcome to BP, I’m an agent here in the Phoenix/Scottsdale area and I work with a lot of investors on fix-and-flip projects, rental properties, and off-market deals.

This means that if you pay off the loan too early, then you'll pay a 1-5% fee off the loan amount. paying off the loan early means you either refinance or you sell the property, both would trigger a prepayment penalty to the lender. that being said, you can choose your prepay options, 5yr usually giving you a better interest rate by like a 0.25%, 3yr being most common and standard, and a 0,1,2 yr where you can buy down the prepay to be less years. meaning you pay 1% upfront of the loan amount to get a 1yr prepayment penalty so you're free to sell the property or refi after 1yr. 

I don't mean to come off as a conspiracy theorist - I'm not saying this is normal; I have no experience with foreclosures, just parlaying the message. 

Explain.I really like this question for discussion Venice, but one very major factor left off is at what risk exposure. 

And I would love some passive income or at least someone to pay my mortgage until we can pay it off maybe.

Unless you have a way to source off market deals or have a crew to provide labor for below market value, you're kind of relying on hope and luck to find a deal that works.

I’ve built relationships with brokers who specialize in Harlem, and one of them brought this off-market deal to my attention.

With the caveat that you have to pay off your VA loan (or use less than your total eligibility) to be able to use it again moving into another property. 

Off the bat, I had a few questions that hopefully someone more experienced can help: 1. do auctions allow financing after winning the bid, or do they require entire amount to be immediately wired? 

First off, has the developer provided you with a term sheet (not a commitment) from a bank showing they'd lend 75% LTC on a mixed-use development?