Best Way to Use $180k Note?

[Andrew Taylor]

Been kicking the tires around BP for a few years now, but to-date I've done nothing but analyze properties and try to educate myself via BP, books, podcasts and meetups. I think I've finally had enough of "paralysis by analysis," and I'm ready to put my money where my mouth is.

Problem is, like so many others, my family and I live right at the edge of our means (that's a whole other discussion) and consequently, I find it hard to squirrel away enough cash to provide a useable investment kitty. We're in the process of rolling my wife's small 401k over to a self-directed IRA, and we're owed another $10k or so that I could see in the 1st quarter of 2019 if I'm lucky.

However, we do hold one significant - if non-liquid - asset: we sold a piece of property to a young couple earlier this year and we're owner-financing it for them. We currently receive about $1,100/mo in net cashflow from that deal, which is awesome. There's a balloon payment due in April of 2019 of about $180k, although I'm guessing they'll want to refinance/extend the note for another year.

My question is, what's the best way to leverage that note so I can start investing now? I've reached out to a lender about "hypothecation" (borrowing against the note), which is apparently a thing. I think I can borrow against my interest in the note, and then use that money to purchase a rental or a flip to get my snowball rolling.

Curious to hear your thoughts on this idea and/or any other options for leveraging the note we hold. Thanks in advance for your input.