There aren't any good, inexpensive multi units.

Paint is relatively inexpensive and you can do it yourself and make a big impact.   

Therefore her claim is that the $1,200 in expenses is really $1200-$500 = $700 and thus a $300/month cash flowing property.Am I crazy for being confused by this?

Explain what you want to do, have drawings and cost estimates for all of it and a time frame for completion, and an explanation of where the money is coming from. 

So you cant resell it in that timeframe and would be taking a chance if you started to rehab if it got redeemed. 

Today's HML is the "new sub-prime" money and combined with Alt A products it is getting very competitive in the space and nothing like it was 30 years ago when I started doing loans and it was 18% and 18 points, these days the money is more institutional money (hedge funds and VC money) than private money (true hard money) like the old days and they want a larger share of the market and you can find rates that are not that much higher than the traditional lenders, also take into account that the rates offered by most of these type of lenders are about where the conventional rates were a decade ago it is still relatively inexpensive money.

My parents will be the ones who will be making 100% of the mortgage payment (They are not qualified to buy a house).I also want to buy an another house for investment purposes (rental), preferably the same time frame as I purchase the first house using VA loan, or as soon as I close on the VA loan. 

You can hide and unhide as you get transactions in that month reconciled.If you need help Fiverr.com is full of inexpensive QB help.

Give him a time frame what you expect to hear back as time is of essence. 

But here you are using your cash in shorter time frames to produce more cash, hopefully(i.e.