Due Diligence for Note Buying

[Will Chitwood]

I'm planning to buy some 1st position notes off another investor who runs a company and once sold they woud be the servicer. I was wonering the due dillegance I would need to go though? To explain their model, here's the description of what I would be buying below. 

From the investor: 

What we do with these is sell the properties to other investors and do seller financing to them after they put a down payment down. So we loan our investors that own the rental properties money. All the properties were fully renovated with tenants in place and managed by our management company so we are making sure the properties (the collateral for the note) is in great shape and kept up as well. The payments would come to us as the servicer and then get paid to you from there so we can track everything correctly on a monthly basis.

In order to buy the note we would put a purchase agreement together outlining the sale of the note. Then we sign an "Assignment of Deed of Trust" which assigns our Deed of Trust to you so you are now the owner of the deed of trust. The Deed of Trust is what is secured against the property giving you your secured interest in the property. The promissory note is also assigned over to you with an "Allonge", which is basically a signature on the promissory note to assign it as well. Then we record the Assignment after you fund the note and you are now the owner. That's it.