It is because it basically is unleveraged by the asset (the ADU) financed (it is leveraged by the existing property). 

Here are some of the options for investing your retirement accounts: * Real Estate - including apartments, single family homes, and duplexes * Commercial property, developed or undeveloped land * Mortgages/Deeds of Trust * Publicly traded stocks, bonds, mutual funds * Private Limited Partnerships * Private Stock Offerings, Private Placements * Private Limited Liability Companies * Secured and Unsecured Notes * Judgments/Structured Settlements * Tax Sale Certificates * Car Paper * Factoring * Accounts Receivable * Commercial Paper * Equipment LeasingYou can also set up Self Directed Coverdell Education Savings Accounts for child education expenses and Self Directed Health Savings Accounts for health care expenses.What if you had a child who was 5 years old and you opened a Coverdell account for them with $500.

I recently have been reading about unsecured loans.

A few years ago started calling banks looking for capital to invest in flips came across a bank that said if you have an LLC we can give you an Unsecured Buisiness LOC.

I was thinking about using an unsecured loan to obtain a rental property.

At this point they are like an unsecured debtor and will most likely sell that debt of for pennies on the dollar to some national collection agency.

this is old  tried and true method of simply having you pay them to get credit cards .. there is no need to pay for this service.. unless you want to of course.. there is no magic bullet ut there that is going to give you credit and financing unless you actually qualify for it.But zero interest credit cards are used by some to do rehab and then pay them off issue is though your fico score drops like a rock the second you take on all these CC.Also starting out there is zero chance of getting any kind of business line of Credit that is unsecured.

There is quite a bit of unsecured money on crowd funded platforms these days where you can get enough for a deposit on a lower end property.

An unsecured loan, as this one seems to be, would not be eligible as a source of funds for someone doing conventional financing. 

His note seemed to indicate it was an unsecured line of credit so I wouldn't touch that with a 10-foot pole.The short answer is: everything is negotiable.