In the San Antonio market, you are looking for properties with the following improvement type on them "Multi-Family 2-4 Units." and that is not a massive list. 

I've found that tenants that don't intend on paying rent frequently butter you up, and try to get friendly with you, OR...they start talking about capital improvements to the place...It's a tactic to make you think they care about you or the property, so that you are less inclined to start an eviction against them. 

It is in an area that I believe is improving and has some future development (large luxury apartment complexes set to develop in the area). 

Not sure if the situation improved or not.

I would like to finish the basement and rent it to live for free versus paying rent to myself.

Then, you can slowly improve the property or put in sweat equity, and when you have sufficient equity refinance conventional and free up your VA eligibility and do it again.

You will need to repair your credit, clear your bankruptcy and start saving every penny you can.......frugal life style going forward as your life situation improves is mandatory.

I would appreciate any feedback, suggestions, comments or anything else that would help me improve the success of my lease option business. 

Can I use the current rental income, or maybe the income after repairs and improvements to qualify for  the mortgage?

Also, if I am inspecting a tenant occupied property, I most likely, unless if the previous owner objects, I ask the tenant to give me a list of known issues and desirable improvements, written or verbal.Good luck.