Additionally, some lenders do offer VA construction loans, but the renovations to the property can only be cosmetic (floors, cabinets, roof) and not structural (foundation, moving walls, building additions, etc).Good luck!

Learn the construction business, real estate is all about contruction

@Aaron Hale  Congrats on the winCouple options from where I'm sittingBuy with an FHA 203k loan and make it your primary residence Buy it with cash and rehab it with cashBuy with HML w/ a construction loanTake on a partner who supplies the cash in exchange for equity/profit splitCall your generous rich uncle and ask him for a no interest loan and do the whole thing in cash.From my experience, no there is no line of credit product based on future ARV.   

@Joseph PuglieseIf your business is accrual basis and previously accrued the revenue and included it in taxable income, yes you could write off the bad debts.If cash basis, you don't get to write off revenue you never received as you never were taxed on it in the first place.There are extremely limited exceptions to this, particularly if you're cash basis and recognized the revenue under constructive receipt, however I suspect your fact pattern is not that complicated.You can deduct your normal operating expenses of the rental.Your CPA is best equipped to help you deal with this.

I would hire contractors to do all of the construction.

If there were construction issues it could go down to 175k to 225k profit.

@Jeremy VanDelinder Do you have thoughts on appreciation of new construction build for rentals?  

I do residential construction work near the twin cities, so if you would like help in that area let me know.

The majority of those "houses" were built as temporary military housing back in the 40's and are of very low quality construction.

Once they’re approved and construction begins, land values rise substantially.