Hey Dan,I'd find it challenging for a traditional lender to offer IO for a 5 year period using non owner occupied RE as collateral.

Dumb Debt also means that the owner takes on recourse debt and personally guarantees it instead of non-recourse debt or other people’s debt (OPD) or cross collateralizes it with highly appreciated assets with low debt to value ratios.

I just point this out for others.. no one can make guarantees that you will not lose money when in fact the collateral your buying is already damaged and is junior position..

There are lots of ways to get the down payment money, credit unions often have a "Signature Loan" or a loan with no collateral needed, line of credit loan. 

The real question is how comfortable you are temporarily cross collateralizing to keep momentum moving.

A few will give you credit for POH (collateral and cash flow).Cash flow from seller financed homes is almost always excluded.   

Hoping to find recommendations for accessing cash using small rental portfolio for collateral.

We offer a quick application and it’s collateral-free.

.- You should also converse with a few lenders to entertain the option of using a collateral based loan, using your equity, and possibly having that cover the down payment for the acquisition of a new property.

JoshYour scenario anticipates being able to keep the loan intact while there’s no real estate acting as collateral.