Analyze properties by looking at gross rental income, operating expenses, and the debt service coverage ratio (DSCR above 1.25 for rentals).

You can lend at higher rates or look for debt funds that are taxed differently.

You must be pretty good friends - most veterans (including myself) would never let a non-veteran assume their loan b/c the VA loan entitlement is not restored until that loan is paid off.  

@Cole Starin What type of take out financing did you line up to payoff the private money and get into long term perm debt? 

Are they going to start paying down that credit card debt, turn over a new leaf, and avoid bankruptcy for the next decade? 

Her mother is willing to (co-sign) and has excellent credit and debt to income ratio that will more than allow but I’m not sure the best way to structure this for the house to still be in our name?  

The 2-3% points in extra cost are worth it if you plan on using as I described above because the use would be for a few  months at most and due to that short term use you can survive a rate adjustment up.But, if you have no plan to payoff the debt like when using for a down payment on a long term hold why pay the extra cost for flexibility and have the additional risk of the adjustable rate with the amortization looming when you can get a fixed rate second mortgage. 

However, you can get loans that are based on the performance of the rental and not your personal income and debt.

Tenants will prioritize their debts based on reprocutions. 

Does not affect your debt to income for future loans in the mortgage industry (auto loans could look different, but i would think similar so hopefully no worries there).