Do I need to actually pay my tenant every year, or do I just include the accrued interest with the security deposit (minus any expenses for damages) at the time the tenant moves out?  

So does simple interest mean that I only pay the accrued interest as a monthly payment?

Otherwise you could fall into making an adjustable rate loan if fees can change.Payments need to be described as customary and a statement saying something like "in addition to payments required the undersigned Maker(s) shall pay a servicing fee of $-------, applied only to the costs and expenses of servicing this obligation with such amount payable together with each payment as amortized or required.It is possible for fees to change, if a fee is the obligation of the borrower any excess paid needs to be applied first to accrued interest, then to any other expense owing, then to principal.The address for payments to be made should be to your address or to that address as may be directed by the Holder hereof with notice required as provided herein.Notice Required; in the default covenants will not meet notice of servicing requirements, as they are or can be different.

Late fees come first so the $475 will cover the late fees but not the remaining late fee which will still be accruing at $25/day Add to this if they get an Atty if you have stated late fees come first they could get a judge to side with them and avoid the eviction Talk about a nightmare.    

Period.However, if you have dreams of accruing wealth.  

This is because each payment applies a different amount to principal and accrued interest with each payment made. 

That's why I would only do it if the LTV was good so If I end up with the property I'm still ok after buying it from the first lender and paying the associated fees accrued during the foreclosure process.

Valerie is correct..the amount of the filed lien is immaterial..the total owed to them per their note is what they can collect before you can collect a nickel..accrued interest and penalties and all..filing the mortgage is easy..could do it yourself or pay and atty a couple hundred..this is a very risky venture..you should have supreme confidence in the borrower and the project.good luck

Paper write-offs such as interest and depreciation...Interest is not a paper write-off, you either pay it in cash or accrue it to the balance of your debt.

Maybe we can accrue these before submitting to the IRS.