Note analysis and investing

[Account Closed]

I am trying to understand how to invest in notes.  It is easy to invest in a note fund, just give money and (hopefully) watch the return flow in. 

Individual notes are another matter.  For now, I mean performing notes.

One can buy an individual note from a number of vendors. They talk about whether it is performing, position (first or second or whatever), Unpaid Balance (UPB), number of payments due, amount of payment. Some sites even suggest a fair offering bid.

What I am missing, is an understanding of the actual returns and the risk. 

If a note has 120 payments left, at $250 per payment, then that equates to $30,000. That is the maximum that could be squeezed out of that note (as a performing note). Say one buys it now for $15,000.  So in the first year, the return might look high ($250x12 / $15000 = 20%).  But, over the course of the note, the overall return looks much less ( future value of $30,000 in 10 years with present value now of $15,000 implies around a 7.1-7.2% average annual yield). 

If the note if paid off early, then the average annual yield will rise, of course. 

So it seems like a mortgage note is just a mortgage backed security that is reasonably safe, reasonably predictable, and low maintenance. It seems that the returns are likely to be in the 5-8% range, unless the note is paid off early.   What have I missed?

Can you sell the note after a year or two? Is that a good strategy? How often are the notes paid off early? How reliable are the note servicing companies? It seems like a pretty low maintenance way to make moderate returns, with a lot of upside and less downside. 

I welcome any analysis and/or advice. Most of the books or websites I have read are long on generalities, but very short on actual numeric analysis. 

Thanks!