Free & clear SFR as collateral for commercial financing

[Kazi R.]

I recently had a brief discussion with an investor who owns small commercial multi-family  properties.  He told me that a local community bank (wasn't willing to reveal which bank it was) in Atlanta metro area allowed him to use his free and clear single family properties as collateral for multi-family financing. I haven't heard about such lending practice before (admittedly my knowledge on this subject is limited). Is this typical for small local banks?

[Darryl Dahlen]

I'll admit that I haven't had this come up much, but I don't find it odd that a bank wouldn't want to use a SFR as collateral on a commercial deal. There could be a lot of reasons why they are adverse to using it; they want actual cash into the deal, don't want mix assets, too much hassle to babysit another property, etc.