CU (Collateral Underwriting) is FNMA's appraisal reviewing tool.

If you own the house, you could get $ from a private or hard money lender with the house as collateral, if it is worth anything for the lender.

Since you have very little equity on the property a construction loan would be a challenge unless you know a lender that will lend based on ARV, not current LTV, and can cross collateralize with another property with more equity. 

If you do it get the LOC/refi use the 8plex as collateral.

They receive interest income and the real estate can be used as collateral so they feel safe.Do they want an equity position?

It was suggested that I could get a commercial loan with no money down if I used one of the paid off rentals as collateral.

you can try DO Hard Money  they will want 2 to 3k up front from you and charge you very high rates but according to them they will fund newbies with no collateral or experience. but from what others have posted its no guarantee you will get funding.. so your 2 to 3k is certainly at risk. 

If your contract is contingent on financing/appraisal, you can get out because your lender can write a letter saying you weren't approved for the loan (given the appraised value of the collateral).

Your biggest risk for NPNs generally is collateral value/condition. 

If I were to offer first lien position on the property (but no additional collateral), with around ~70% LTV (based on appraisal after repositioning), 5% interest only payment, and 10 year balloon payment with some kind of per-payment penalty, is this something lenders would be interested in?