I invest in Orange County which is still very very expensive by national standard and I don’t generally spend much over 200-250k/unit.

@Charles Richardson  most standard contracts have a 10 day due diligence clause and its for any reason.. that's the Maximum time you should tie up a house without non refundable EM.. once you go past 10 days you need to go Hard with your EM. 

My girlfriend is doing her clinicals there for med school, so I'd like to buy a house there for the next 18 months, then rent it out.

Loosening of the credit standards. 

Don't know all that goes into it.Is 12% interest standard in this sort of thing?

I'll do everything legally (if this is legal) with contract and have the proper paper trails.If YES, would it make sense to rent at my mortgage rate or standard rate?

At the moment, I don't think it will pass VA inspection standards, the porch stairs is rotten and support is broken. 

Depending on the lender and your credit you may be able to do a 15% percent down loan versus the standard investment loan which requires 20% down. 

25% on investment condo is more the standard. 

Frankly, if it is not a standard deal, they will probably screw something up.