Worst case i will use a heave down payment using the liquid home equity cash to qualify for that second mortgage.advise 🙏 please

I always worry when people putting large sums of liquid assets into deals.  

By carefully balancing the collateral and ensuring rigorous underwriting standards, it is possible to mitigate potential downsides while capturing the upside potential, providing a compelling investment proposition in a competitive market.Uses of Mezzanine Debt CapitalMezzanine debt can be deployed effectively in several ways, including:- Liquidity Provision: Providing liquidity to set aside interest reserves for first lien lenders and tax and insurance escrows required by the first lender.- Property Improvements: Funding additional property improvements such as renovations, HVAC work etc.- Operating Shortfall Coverage: Addressing operational shortfalls during challenging periods.Objectives of Mezzanine DebtThe primary objectives when using mezzanine debt include:- Project Stabilization: Completing renovations, construction, or improvements and then stabilizing the property with 90%+ occupancy.- Interest Rate Management: Buying time until interest rates normalize or decline.

Our SRPD has no section in it which specifically asks if the seller has knowledge there was past fire damage (unlike for mold) to the property, however, the buyer's inspection revealed burned wood that had been sprayed in the attic.

A set of two multifamily properties are being liquidated and sold near me and it’s about $2M before any possible discount/negotiations with the owner.

Listen to the people who tell you to have ample liquidity.

No, this wouldn't be possible - the down payment would need to be liquid and pretty much all DSCR Lender's won't allow a 2nd lien on a purchase (also requiring both liquid DP and liquid asset reserves)

The only problem is that my liquidity is now completely tied in my property.

If you don't have the liquidity to purchase the property your other option is to finance the acquisition but how do you obtain financing when you can't even show sufficient down payment funds/liquidity on your PFS?

As for a generational lineage plan, it's best to assume at a future date you will liquidate EVERYTHING, roll it into a fund of some type be it in syndications, W.S. or what-not, and than the heirs will "manage the managers" as this is the most realistic long-term multi-gen inheritance structure.