I could find some one to put a dent in the mortgage but it'd still be pretty pricey ( in some cases - depending on area and desirability, one could find a 2 family for around $1MM but they're rare and getting rarer by the day. 

Buy what your BAH can afford, monthly payment-wise.Keep in mind that the VA loan is intended to fulfill servicemembers' desire to attain the American dream of owning a home.

Sure, 4% isn't anything to get excited about, but if the location is desirable enough that you can keep it rented at a near to market rate, then you must also consider the other ways in which you profit from owning rental real estate.

This home was in a less than desirable neighborhood.

Or look for less desirable areas with lower prices with higher cash flow potential?

Worse house on a very desirable neighborhood.   

Looking back, I'm sure this was a part of the reason they had no sense of urgency or desire to leave within the 3 week timeline we gave them.

It is still a strong seller's market in the Bay Area, people over pay a ton to get what their heart desires.

I know it has at least a 10k foundation issue...but it's a good piece of land in a desirable neighborhood with a silly growth curve (major teaching hospital being built nearby).

The one big negative is that the barrier to entry is getting high compared to less desirable areas of the country which I believe is the main reason some Coloradoans are investing in less expensive markets as mentioned.