With myself coming right out of college, I am used to living with other people and with very little space, which is why I thought of the idea of renting out an extra bedroom in my half of the duplex.

This may be unpopular, but I'd say focus on earning more for now, much much more.

Then you find out local residents earn $28,000 a yr won’t pay $1500 rents, house doesn’t seem so good anymore.

This is because the VA loan has extra requirements for appraisal (BLUF: they must be safe, structurally sound, and sanitary — no big fixer uppers).The real value in the loan is being to put no money into the deal up front giving you a greater CoC return for the right deal.

A quick rule of thumb to figure out if the rent to earnings ratio is 1/3.

I would imagine many contractors and investors are always looking for folks who have extra motivation.  

It seems if you just did IO for extra cash flow, after the balloon payment all that cash flow would just go towards refinancing the property at 75% LTV. 

The extra stuff helps but price is what pulls them to your rental.

Keep track of the different types of monies-tax free, deferred, exempt and the earnings associated with each type and you should be fine. 

Then as I get payments, I apply the principle portion decreasing the value of that equity account, and placing the interest income into "interest earned" under income.