Instead of selling and triggering taxes, I’m looking at staking or collateralizing part of it. 

Far too often, investors pay for tax segregation studies without understanding the implications of depreciation recapture, purchase properties based on unverified assumptions shared by their realtor, accept the loan terms without proposing alternative loan structures that offer the lender equally safe collateral, form entities without understanding their purpose, secure the incorrect or unnecessary insurance, or spend unnecessarily on improvements and inefficient construction practices. 

Anything 5+ is commercial 4 and under is residential.  5+ requires much more in terms of borrower conditions inlcuding down payment, Higher Fico scores, Land lord experience, some lenders requiure you to not only own a primary home but also 1 or more invetment properties for 12 months (used for landlord eperience, pay history, collateral, etc.They may also require PITI reserves 12-24 months or 6 months per property in addition to the subject property. 

It’s whether the numbers, the collateral, and the structure make sense for the seller’s risk tolerance.If a seller prefers cash at closing, zero risk, and maximum liquidity, owner financing is a bad fit. 

Biggest lesson in notes: the paper is only as good as the collateral and the borrower’s behavior, so buy docs and pay history, not marketing.

I’ve seen some banks make these kind of loans at lower rates - when I did a thorough analysis I found that these were really situations where the borrower either had a long term stellar relationship with the financing institution (so the loan was really a PERSONAL credit based loan), or the borrower had put up significant additional collateral. 

I am trying to use another property I already own as collateral on a promissory note as to not trigger any covenants.

Best note flow for me comes from relationships first, lists second: I work direct with smaller banks/credit unions’ special assets, property managers and loan officers who flag nonperforming borrowers, and active investors offloading re-performing paper; I’ll also tap a few vetted brokers, but I require full tapes, collateral files, clean chain of title, and recent pay history before bidding.

Negotiation tactics that actually work:When you reach out, keep it simple and factual — you’re the new owner, the borrower defaulted, the panels are abandoned collateral, and you’re willing to settle to make this clean.

The collateral matters.Jay, I only wish pricing was that low.