2) It looks like we have to sign a quit-claim deed for the property to be in my husband's name, which triggers a gift tax.

Think of it this way....if the tenant takes you to small claims court, could you show the judge that the tenant did the damage? 

There is always small claims court.Good investing...

What happens if they claim the landlord took one?

The point is that distressed areas have such prices because it is difficult to invest there, and areas that appreciated the most rapidly may well have peaked to unaffordable levels.I saw a podcast recently where it was claimed that high-end grocery stores like Whole Foods Market and Trader Joe's are a good indicator of a high-end neighborhood.

I put in an offer on one, but apparently there was a Corona-related death to someone close, so they claimed they weren’t selling anymore.

Heres an example - You can be working on getting a potential seller under contract for 6+months only to find out that they're totally unrealistic with their price-point.

Then say if you do not receive your deposit by that date, you will file against them in small claims court.

By making that claim when you take out the loan you will be committing mortgage fraud.

If he's not paying taxes and not claiming his income then I would not use his income either and he would be disqualified.