Unique Approach to Mortgage Loans (cross-collateralization)

[Jordan Bowley]

Hello again BG Bloggers!

I am looking for anyone who has experience or a potential POC for someone who may know or has used cross-collateralization to negotiate a mortgage for a new property.

Background/Scenario: I am forming two LLCs, one parent out of state, and one in-state to hold properties. My investment group fully owns one property in the same state that we plan to purchase our second property. We want to purchase a 3-4 unit MF and attempt to have no down payment while still purchasing the property under the in-state LLC.

The Plan: Meet with as many credit union/local lenders as possible and attempt to use cross-collateralization to leverage our first properties equity to have the down payment rolled into the mortgage. The lien would act as insurance against the additional risk the lender would take on. The figures are roughly 120K value first property and looking for a 250-450k MF. I feel like that's enough to entice a lender to allow us to use this method. This is also an attempt to remove the need for a personal guarantee to prevent piercing the corporate veil.

Thoughts, opinions, or strongly worded responses of beer clanking approval?