Collateralizing the loan isn't a risk control. 

I just want to understand my risk and better understand the whole process.

If you won't you risk to run afoul of the FHA.

or try for sale by owner (Craigslist)...We'll explain that there will be more fees involved, and that it will take much longer to sell (especially in this market, compared to a few months ago) - but that if they're not in a rush of any kind, that it's usually their best option...In our experience, the best thing is just to give people real advice, and if you can really help them out - tell them that.Small margins are also tough for rehabbers, who are taking on risks and spending lots of time and money on the rehab.Best,Sean

The more adversarial your approach the higher the risk in increasing the cost.To determine the boundaries, check the legal descriptions of the properties in both of the deeds.

And be sure to check with folks other than your family banker (where you carry all your accounts) - you'd be surprised how much price / term shopping can save you on each deal. 

Obviously if they treat you right, it could lead to a lot more business referred to them, and if they don't they risk losing all of their business. 

BUT NZ, and especially Auckland is at no risk of collapse. 

I know the old phrase high-risk high reward, but being cautious is also a good way to not lose money. 

Why go through the headache of bidding on it and then having to back out later, possibly risking the money you put down?