My goal would be to use BRRR and then hold as I would expect the value of the house to increase as more commercial spaces move into the area.

The Fix and Flip calculator doesn't take the loan cost into consideration, so I used the BRRRR calc, but would likely end up flipping it.. 

However, in the scenario you described, it appears there will be a first mortgage in front of you, reducing your security/increasing your risk.As an investor, if you are putting in 50% of the cash required to close, you should expect 50% of the profit on sale. 

2) What can I do in the meantime to increase my chances of the bank saying "yes" when the time comes (if different to a US resident)? 

Now, let's say that the property value increases to 140k after the reno, can I then get any capital to work with if I approach the bank for a cash-out refi?  

I believe the property can use some work and renovations as well as an increase in rent.  

If you improve the property by investing, for example $20 per square foot, what would those improvements bring you in increased rents?

Would a plank with an underlayment handle it better (would increase thickness) ?

That can be increased if needed.4.

Now the increase in fixing cost, re-appraisal, the offer (VA loan), and the supply and demand of market suddenly change.