Just got fired from my day job in the middle of a rehab >.<

[Philip Johnson]

Ok, so I am currently in the process of rehabbing a home that was purchased with cash.  I have enough funds to finish the rehab.  But, I JUST GOT FIRED from my day job! So, this means I will likely not qualify for a loan (my DTI is quite high) to refinance to get my cash out.  I need the money in the home to do my next rehab and pay back an investor, and I do not want to sell the house, it is an amazing location.  My solution is this: 

1. Transfer the title of the home to a family member, or someone willing to take the property that I have 100% unwavering trust it. 

2. Family member then refinances the home, and gets a nice fat check

3. Family member then gives the nice big check to me, BUT THE PROPERTY AND MORTGAGE remains in their name.

4. I will receive the cash flow on the property from my family member and manage the house 

Questions: 

What's in it for the person willing to do this?

Is there a tax penalty that he may get for receiving the home "for free?" 

Do you know what would happen to my $50,000 improvements in terms of depreciation claims? Can said family member claim the improvement depreciation? 

Is there some smarter way to do this? What if I sold the house to said family member instead? What about co-signing? Ultimately, I want to get the house back in my name and the loan in my name so I can claim the tax benefits. Is there a more creative way to do this? 

Thanks! 

[Stephanie Medellin]

@Philip Johnson  I would not involve a family member in this, there are several loan options that only need the property to be leased, and the rates really aren't that much higher as long as you have 25% equity.  Once you have your cash back and possibly a new job, you can always refinance into a conventional loan.