Never heard of itits a form of ownership rights.you buy a property from someone and you deed them a life estate.. they live there for the rest of their life once they pass they no longer have the right to the property and you then take over possession.. it is common for those getting on in years  and their heirs don't want them to have to move and it generally means no payments maybe only utls.. 

The NOI plus the debt payment doesnt exceed what I make now at my job.

I will assume your debt free except real estate.

If your credit is low, it will be difficult to apply for any loans to use as a down payment for hard money or portfolio lending and may even drop your credit score more, bringing on new debt.

If they underinsure you because they are unaware of your net worth and a lawsuit occurs that is greater than your insurance limits...it will be your livelihood and material possessions at risk.

When they look at your credit, they look at home much debt you have relative to your income. 

This shows the lender what our debt to income ratio is.

My current credit score is... and  my current Debt to Income ratio is...  

As you mentioned only half of the cash out is used to construct the new addition,  only interest related to the debt that was actually used, half in this case,  to fund the new remodel is tax deductible. 

I would expect a PM to cost 11%, putting you at about 44% not including debt service or cap ex.