As was said, you can get sued for anything.....and then it is about who has the most money, not who is right....So ask your local attorney first if it's viable.

@Amanda Nardo one note on SBA is you need to have two years tax returns to prove a viable business.

I see many successful stories of live-in flips and selling them, but I want to know if cash-out refinance can be a viable option. 

LTV is not a good indicator of a viable RE portfolio.

If that was the only viable option, I would be happy to keep all my money in a retirement account and live off of that when I am older, however investing in Real Estate has opportunity to give me the monthly income that I would make as well as the opportunity to do things that I want right now without having to worry about finances! 

Two viable answers to provide secure benefit to him and completely avoid the tax I'd see would be1.

Land is a viable niche for cash flow, but I'd encourage you to do your research on a site like REtipster.com and see if you think it's for you.  

I'd plan to have enough cash to cover the balance due, should you need to pay it off if refinancing is not a viable option. 

Is their business viable?

But if you can get around that then it could be viable.