He continually cites the dog smell, which naturally leads us to believe he wants to fund it using our deposit.  

A nearby lot suggests the land could be used for a multifamily home for student housing, but based on the area (and due to the nature of students) it seems that each rental unit would not go for much money, and even if it did cashflow, I have seen videos of landlords (and know from experience) that housing students can be destructive and costly.But, if I could figure out a purpose for this land which would net the owner a profit over the long run and gain enough knowledge to sell the idea, I would buy the lot with the purpose of flipping it to a developer who is more interested in long-term gains.

This will give you an indication of the conservative nature of the cash flows at the property.

Can this loan then be incorporated into the closing documents when sold so that it is repaid prior to the 1031 exchange?

As time has gone on, I assumed that both properties would be easy to rent as I would target other officers living in those areas who’s BAH would naturally cover my mortgage.  

However- given the nature of this question, I am going to assume you have no experience as a landlord at all.

I don't really ask them as a question --- I just naturally try to bring it up during a conversation to see what he or she has to say.       1.

If you start keeping your own counsel, it becomes more natural over time.

@Jay Hinrichs - Yes, I am talking about lots with gradient big enough to make a basement with the natural slope.

If there is a way to incorporate lease options with VA loans, that would be great because I don't want to miss out on these deals.