Cash out refi to help in-laws in retirement?

[Ryan Rich]

BP community,

I have been a member for several months now.  We have come to the realization that my in-laws who live an hour away, need to be closer to us.  My father-in-law's health has been steadily in decline and they no longer have any family nearby that could pitch in if an acute event happened.  We are looking at a very nice local retirement community.  The price of admission is about 70k and they would need our assistance to cover the monthly expenses.  They currently owe about 35k on their mortgage and the house is worth about 150k +/-.   Rent-o-meter says that average rents for a 3-bedroom house in their area run around $1250. I am wondering if a cash-out refi would work in this situation.  We could take the equity out of the house to cover their admit fee to the retirement community and then rent out their old house.  The rent should cover more than the mortgage even at a higher principal. The additional rental income could then potentially be used to help cover the deficit in their living expenses.   

I have yet to discuss this idea with any lenders,  but am I missing anything here?  Is this a crazy idea?  Any feedback or pitfalls to consider would be greatly appreciated at this very stressful time.

Thanks!