Commercial property using SFH as collateral?

[Jeremy D.]

I found a 10 unit that looks interesting and am about to start exploring financing options. I have (2) SFH rentals that are paid off and would like to approach a commercial lender about doing a blanket using the SFH properties as collateral on the larger purchase. Has anyone done something like this before? Is it possible? I have a bunch of 1-4 family properties financed with residential mortgages and this is my first foray into commercial.

The deal would look like this:

10 unit purchase price = $400,000

Closing costs on loan (this is a guess) = $10,000

Market value of my (2) SFH = $100,000

Ideally I'd want a $400,000 commercial mortgage, 20 year amort, I am assuming 7% interest. When i run the numbers my DSCR would be 1.50. Using the SFH as collateral my LTV would be 80% with $10k out of pocket to cover closing costs. If the bank requires 75% LTV on a commercial i'd be fine coming to close with more out of pocket.

Thoughts?