Next you want to check with the city or county to determine if you can do what you want to do and what is required for all zoning approvals and the time frame. 

I've heard that pre-approval is important, but I wanted to see what some other thoughts are out there.  

Hard money lender with pretty easy approvals.

First, ensure your credit score is up to par to receive your pre approval.

We have been approved for 650,000 but unless it has a second unit that can help pay down the mortgage we don't want to pay more than about 2500 a month so around 400,000 has been our price point.My wife and I got pre-approved for a VA loan a month ago and have been working with an Agent from Redfin.

Not all lenders require employment and income to be approved for a loan. 

I have 25k cash and was just approved for a 40k heloc.

Don't know about Denver, but in areas around NYC where I am, renting to 3 or more unrelated people requires approval of the property as a rooming house.

Her firm isn’t a HUD approved broker and she doesn’t understand the process.

Is this written up as a cash offer or an offer with a contingency that needs to be put in specifically for obtaining a money partner/hard money lender approval?