I view rental income as a high return preferred bond with better tax characteristics and hopefully purchased at deep discount to NAV- net asset value.

Take the money and throw it into a safe liquid investment like a municipal bond or something else until you need it (to offset the interest).FYI, those closing costs are way high for a VA loan.  

Were a lot of those improvements funded by public bonds or private money?

I'm trying to strengthen my mindset. 

I think hubzu is ocwen (huge) and title companies are bonded.

Current method: Put money in bank account that earns 1%Idea 1:Invest the money into a bond or dividend stocksIdea 2: Reinvest the money to help with another down payment on the next property.

This will make holding costs rise but it also reflects a strengthening of the economy.

Private money are individuals (who could also hold a license in some cases) who are often friends, family, business associates, doctors, etc who are looking for investment options outside of stocks/bonds/mutual funds/CD's/Etc.

Good luck on liens for that, next time, hire a professional - meaning licensed, insured, and bonded -, not someone from the streets.

But as time passes and you get more equity (good thing) your ROE decreases to a point where you might as well be in bonds for that amount of headache.And I'll tell you after having 10 turnkey rentals that there is a CAPEX tidal wave that kills you in year 5-10.