@Stan Watkins Recommend exploring as many sources as possible to get referrals AND cross-reference them to get as much accurate information as possible.Check out NARPM.com, BP’s Property Manager Finder (BiggerPockets: The Real Estate Investing Social Network), etc.Also, encourage you to learn from the mistakes of others - by reading posts here on BiggerPockets about owners not having their expectations met by their current Property Management Company.

Can you cash out refinance?

For example, like syndications, they use building a portfolio by buying stuff that is a deal and getting paid out at the close of escrow and get a return on that deal as well (passive and active). 

Purchase price: $430,000 Cash invested: $25,000 Large brick 2 family house What made you interested in investing in this type of deal?

It is better to buy another property cash.

Find out what their concern is (and tell them you need more than 'bugs').

We've dealt with this numerous times over the years.Have listed the same property for rent furnished & unfurnished and at least 90% of the time we end up renting them out unfurnished.Would recommend trying renting them MTR.

You're correct to point that out because it's not supposed to be in there. 

It's also a way for them to legally and transparently transfer some value to you while still receiving enough cash to fund their next purchase.The idea of putting the property into a trust or LLC, with you and your parents as beneficiaries or members, is worth considering from an estate planning and tax perspective but won’t solve the financing problem by itself.

Depending on how low the score and what you intend to do with the equity, it might be worth considering an FHA cash out refi to pay down debt at closing, solving the DTI issue in the process.