A conundrum: how to Refi my rental property

[Brandon Turner]

Hi, I am working on refinancing a rental property. I bought the home with a Hard Money Lender and meant to flip it. Didn't happen. But I got some good tenants who pay the mortgage and then some. So I would like to refinance this property and hold on to it for a few years. I have a few options, and would love anyone's input on what they would do.

I owe $43,000 to a private lender, and roughly $60,000 to my father's Home Equity Line of Credit(we did this flip together, but only I am on title. He doesn't have a lien or anything). The house is worth around $130,000. My main goal is to get long term financing that will free up as much of my dad's H.E.L.O.C. as I can (hopefully all of it). (and this would be a "cash-out" refinance because my dad's HELOC is tied to HIS house, not the rental)

The problem: I don't have document-able income. I left my job as a banker, so no one will give me a mortgage. My father does have good income and good credit, but again, he is not on title.

So, as I see it, I have 2 options.
1.) I could sell the property to my father, and he would purchase it from me with a new loan. It would then be his. However, he would have to put down 20% for a down payment. Banks (it seems) won't allow just 20% equity, but actually need 20% physically paid. But he doesn't have the 20% (because its all tied up in the HELOC which is being used for the house, which will be free once the refi is done). Its just a weird situation I think.

2.) I could also add my father onto title and then just refinance it. However, adding him would trigger a "due on sale" clause from my private lender. Also, banks usually have a "Seasoning Period" - a length of time a person must be on title before refinancing - usually 6 months. I don't have 6 months. I have 3.

So, that is the situation. Any questions, comments, or names of institutions that would do something like this would be great. I'm sure there is a solution to this problem, but I just haven't figured it all out yet. Thanks!