I've attempted to dispute an appraisal with limited success especially with the Dodd Frank rules in place.

No limitations at the moment both kids are under 2 years old.

Even if you qualify for the delayed financing exception which allows cashing out before 6 months, you will be limited to recouping purchase price of 10k plus closing costs. 

You don't really have the option to be super hands-on (which can yield higher returns for folks that do the DIY thing really well, Option 2 is the only one that could allow you to take advantage of forced equity), so your options are somewhat limited.

Also, there are limits on your va loan, depending on where you buy.Use it for YOU and buy a property you would like to live in.

The silver lining may be that the taxable loss may offset other income but in many scenarios, the offset is limited.

Collin -Go on HomeAway, VRBO and/or Airbnb and look at the calendars of comparable short term rental vacation home properties in the area of the home you are considering purchasing.Here in the Orlando area, the nightly rates and occupancy %s for homes that are new or newly renovated with fun amenities are significantly higher compared to those that need renovating and offer limited fun amenities.

The city of Destin is in the process of passing an occupancy limit for short term rental homes in residential zoned areas.

@Colin Youn You might want to read these: How to Effectively Conduct Joint Venture Agreements as a Real Estate Investorhow-do-i-properly-construct-a-purchase-with-a-partnership591376-create-an-llc-for-first-partnership-best-way-to-do-so526244-taking-on-partner-s-and-limiting-our-liabilitesPrepare your partnership with these questions first:questions-for-capital-partners/real-estate-partnership-questions/questions-ask-investment-partners/If you decide to proceed, I think you should have an LLC formed going in a limited partnership with your(s) partner(s) LLC.

@Jeffrey Levy the $100k/$150k is called the Passive Activity Loss limitations.