Your solid construction attorney (yet to be determined) is the one who can negotiate with them for certain improvements above others, and make sure the city isn't being overly demanding from the point of view of the IBC/IRC plus the Muni's own amendments to those regs.

Hey Alex,I have over a year of experience managing a real estate investment company, I am also a licensed realtor, and licensed home improvement contractor.I would be happy to hear what you're looking for and see if I can help you out.Shoot me a private message if you want to chatBest,Ryan

My plan is to do the work, make the sqft improvements and cash out refinance 6 months down the road.

Not hard and fast, just rule of thumb. 

He has been working on getting it refinanced to lower the monthly bill and has made little improvements here and there.

Even if all that was correct even if you could muster up 5 grand a month in rent you still are not getting near the 1% rule .

“The reason a VA borrower isn't allowed to rent out the property is because of the primary occupancy rule.

If you could do that and tremendously increase your equity, raise rents you may be able to improve your cashflow and then take out some of the equity and go invest it elsewhere.It seems like you are sitting on a huge opportunity to develop some equity, just have to look at all the scenarios and see where you come out best.If you sell, while you may get some walking money and a nice profit, you are likely leaving a lot on the table for the new owner to capitalize on. 

Regarding your rents question, you're going to have to find a REALLY good deal around here in order to meet even the 1% rule, in my observation.

My realtor told me this one a day after we first talked, so I'm a little overwhelmed and wondering what questions I should be asking.Numbers are $165k 2br2ba in a pretty good location of Central Texas, currently rents for $1700 (1% rule) "it needs some work or can keep the tenant.