How do I use a note as collateral?!

[Logan Turner]

I've been reading a few note guides, and came across the concept of using your note as collateral for another loan. This way instead of selling, paying taxes, you can borrow against it and invest again. Anyone have any idea how to do this? I have a note with UPB at 91k and 10 percent interest rate and I'd love to get a personal loan for around 25-35k. I can sell the note for 74k but would be hit with a tax cost of around 40 percent. And I don't need all 74k right now. I'm also not too keen on a partial note as I feel my position in the repayment if a default occurred would risk me losing it all, since all lawyer fees etc get paid first! Anyone able to help me get creative and squeeze out some money from this note without selling it all or partial?

[Jay Hinrichs]

@Roman M.  I used to do these all the time with my commercial bank not sure why you think a commercial bank won't touch it..  its called a Hypothecation.. quite common.. Easy and works great..

I did mine when I was in the timber industry.. it was common for me to log a property then sell said property to buyer on contract.. but they had to go through the building permit process and in Oregon that can take a year or two.. so I would sell on contract.. then take my contract to my trusty commercial banker and hypothecate it.. IE pull the cash out of it so I could go buy more timberland to log.. get payments from my buyer .. pay the bank their payment then when my buyer cashed me out I cashed out the bank and got my equity... for me it was not as much a tax play as a get stuck money out now without massive discount to a NOTE buyer pimper .. who is looking to get notes with massive discounts.  my bank would do this for 1 point and going rate at the time on interest which was about 6 to 7% .. I usually got 8 to 9 on the seller carry.