Buying a HUD property with VA Loan

Recently I found a HUD property that I thought I could use my VA Loan to submit an offer, so I called my agent and looked at the property.

First of all, on paper, it is a 2 units but there is a finished basement. 

Second, I found many paint chips inside the building and I believe it is just due to its age, also one broken kitchen cabinet which only needs minor repairing and 2 windows with 5 inches long crack in the basement unit.

Other than that, it is a pretty nice legal 2 flats property.

However, my agent told me that the VA appraisal is not going to approve the mortgage since they think it is not in move-in ready condition. I also heard a lot of stories about the VA appraisals, but they are all he said she said my friend said....

Does anyone has real experience about the VA appraisal?