Using Securities-Based Loan to BRRRR — Bad Idea?

[James Neal]

I'd be able to secure a short term (less than 3 years) cash loan of $500k against my assets at a rate of just over 4%. The loan would only be called if the value of the underlying assets dropped in value by over 80%. I expect I would be able refinance either a multi-family property or SFR within that time frame, pay off the securities-based loan, then do it all over again, effectively leveraging these assets to generate a portfolio of cash-flow-generating properties, all without touching the underlying assets.

Has anyone done this before, with or without success? Does anyone who hasn’t done this have an informed opinion about how good or bad an idea this is?