Multifamily Cross Collateralization

[Paul Shannon]

Hey all, thanks ahead of time for advice. I have an apartment I'm repositioning currently. I purchased it for $1,045,000, cap ex is $170,000. ARV appraisal was done pre-closing @$1,350,000, which would put the in-place loan at about 63% LTV. Recourse debt and no partners.

Once stabilized, I was considering a few options: 

1. Refinance. I should be able to get out about $180,000 @ 75% LTV. Cash out would be use to acquire another asset. No idea when that may come along. There would be fees associated with this obviously, which is a downside, but cash is handy.

2.  Cross-Collaterize.  In this case, if I find a property, I can leverage the other stabilized asset and use the equity in it towards a down-payment, etc.  Has anyone done this?  What are the pros vs. cons?  If its recourse anyways.  If I default, the bank is coming for all my assets anyways, so I don't see any additional risk outside of what I'm already taking.

One con I see is not having the capital liquid and finding better terms with another bank or using/qualifying for agency debt on a future deal.   

3. Keep the LTV at 63%. Better Cash flow. Still have access to short-term capital to put down on an opportunity. Then could refi later out of my existing property. Rate change might be a risk here. Could also look at sponsoring a deal and syndicating to get it done versus using so much of my own capital.

Nice to have some options, but looking for guidance specifically on cross-collateralization and risks, as well as what you would do.