I have the opportunity to buy a non-performing note at a discount.

Non performing paper SMH...yes they are stupid but I guess smart if you have a buyer of bad mortgage paper.

Had anyone else gone through this process, i assume I need a payment bond versus a bid or performance bond?

always remember the important thing is what your audience (investor) wants.How safe is the investment and why, how much money can he expect to make and why,,not BS numbers, but solid numbers that you can show of specific houses that are for sale now (or recently), what the rental income would be, and the entire breakdown showing your calculating projected maintenance, vacancy etc.You HAVE TO KNOW WHAT YOUR TALKING ABOUT,,what will interest the investor is your knowledge, showing you have done your homework,,you have to do a lot more reseach before your ready to pitch anyone (unless they are a relative, but even then I recommend a lot more research,,,talk to investors in your area,,,,get to know your market,,after you have done all that a 'business plan' is just an outline of how you plan to move forward, what is important is the thought/expertise you have put into itI once knew an MBA from UCLA that couldn't accomplish anything,,he could write fancy reports, business plans,,but when it came to actually performing,,he fell short,.

I've been going with a nominal 10% based on the performance from some of my other properties, which admittedly could have been pure luck.  

The bank would rather see those notes turned back into performing assets than to foreclose on the property, even if you increase the value of the property. 

He is paid a salary, two raises since he started, exceptionial performer, without being tied to specific preformance criteria, mostly because I couldnt figure out the criteria.

I don't care about a "Comp" I want to evaluate the performance of the property.

The taxes and insurance (homeowner's policy) are in the buyer's name, paid for by me (additionally insured) as part of their monthly payments.If the property needs work, or upcoming repairs (new roof, windows, etc) I include these improvements within the contract with a penalty cost if not performed by agreed date.

Although, ironically, our 'bad neighborhood' purchase has performed well.