You shouldn't have an issue on a collateral standpoint if you pledge both it should keep you from putting any cash down. 

Well for non performing notes the due diligence is critical and getting a complete set of collateral files sometimes can be a challenge.

They tried to get me to cross-collaterize other assets, to which I said "f**k no"!  

The discount may not be terrible since the property provides strong collateral.

Policy loans against the death benefit can be very advantageous for purchases of properties outright, supply a down payment, or use as collateral so those greedy banks cant be so greedy, etc.

 $1500 or much more depending on steps necessary to bring it down without collateral damage.  

@Alex Franks well the rates weren't super low and there was collateral required, so there is a limit, and it was one small fee - wondering if the real ones every charge an application fee, even a small one.

I did use some of my lower end SFH property as collateral which is a calculated risk, but reduces the money I bring to the table.

I do read that they do not do collateral, though, so it might work?

Unless you have another source for cash or some collateral to borrow against, you may have to slow your plan down some.