How to Legerage a Private Note?

[Daniel Dietz]

Hello All,

I recently went into a 3 way partnership with my brother and uncle where we are all using our SDIRAs (merged into an LLC) to buy 'Buy and Hold' properties. We have one so far, and likely will be adding more soon.

One of those partners holds a Private Note to a relative for 100K, interest only @ 5%. It used to be 7%, but they recently renegotiated with the lower interest rate environment. The borrower used the money for a duplex they bought and intend to keep for the long haul.

My partners and I are looking at buying OUTside of the SDIRA/LLC also. There is a chance that the borrower would willing to refinance out of the Note. If the Note is retained (I believe there is about 3 years left on the balloon) what are the option of how that Note can be leveraged to generate capital for more Buy & Hold purchases?

Specifically, within conventional financing routes is there any way the Note could be leveraged for 'down payment' portion of a purchase? By using a 'portfolio lender' (we do seem to have lenders locally that are willing to be creative compared to conventional rules) would there be an more of a likelihood of working some kind of deal like that?

What other options am I not thinking of that would be possible?

Hope that all makes sense!

Dan Dietz