Cash-Out Refinance on a Seller-Financed Rental?...

[Justin E.]

My father owns a SFH rental worth about 250k. He wants to sell it to me, and I want to buy it. He wants to do seller financing so he has an income stream through retirement. He isn't retiring for 8 more years, so he is proposing that I can take ownership now, but not start making payments (at a higher interest rate) for 8 more years. This year the GRI was $22,620.

I have a family friend who also is looking to sell their SFH rental property, ASAP. It is currently worth about 170k with some great opportunity for increasing its value and rental income (read: fixer-uper). They don't want to do seller financing. They want to get their money and get out. They have been renting it out for the past 32 years and are just ready to be done with landlording. In 2015 the GRI was $13,800 (they are undercharging for rent by about $100/month).

I am currently renting. I am also looking to conventionally finance another SFH for 210k with 5% down in 7 months which I would occupy-- it's new construction.

My question is: Is it possible for me to use the seller-financed property from my father to buy the property from my friend? Does a Deed Of Trust allow me to do a Cash-Out Refi? Is there a way to perhaps add me to the Title which would allow me to do the Refi, without adverse tax ramifications for either my father or myself?

Some other info that may be helpful: My salary is 53k. I have a DTI ratio of 6.5%. I am a full-time student studying Computer Science. I would much prefer to buy both investment properties, and live in the new construction SFH.

Any thoughts/advice, please?