I see Option 2 being the route that is most often chosen if there is equity.

We are going to try the married filed separately route this time and this is a bit unknown territory for us.

Attorney is the best route.

I think the right thing to do is to go the VA loan route. 

I understand that another route would be to use a private lender or HML, but if it is your first real estate purchase/rehab are they even going to be willing to work with you?

I do think HELOC's are a necessary tool for investors to be used for downs and closing costs, but given your tight income right now, it may not be the best time to go that route, at least not yet?

If you don't want to go that route, don't want to go through red tape, and depending how sensitive to terms, let me know. 

I've read that some do the quiet title route.  

The best route is a home equity line of credit against your own home.

Quickbooks is something great to use just starting out and can be a cheaper route than paying for a monthly subscription.