Trash can and you'll have a better chance of using hen's teeth as collateral for any mortgage loan in selling it. :)

Lenders will always look at a borrowers ability to service debt first before ever considering collateral.  

Any free and clear property to use as collateral (or other types of assets to collateralize)?

Here's why:You are trying to acquire the asset which is held as collateral.

Maybe you can use collateral from another property to use for this loan so it will "look" like a cash offer to the seller?  

Again, IMO, unless you have a number of rental properties or other assets that could be sold to cover the debt, I would not use my own home as collateral to buy a rental property.My $0.02

A reasonable investors will not lend on a property with a 15% equity unless you can show that your rehab will significantly increase the equity in the collateral.

The question is what is the collateral and underlying to the private money loan.

Often if you're looking at a % basis of the balance toward the end you can get into higher release fees as their collateral is reduced, go with a flat dollar amount to amortize to payoff.You have enough experience to get through common financing arrangements I'm sure. :)

I use to do this regularly to leverage the next deal, it gives the note buyer further assurances....I've also simply used the note as collateral for new money and kept the note and assigned the payments.