I'm a newer note investor, picking up a few deals (performing and non performing).

I am open to all types of investing while focusing slightly more on rehabbing since I want to start a design build firm (high performance residential). 

He owns his own business doing cleaning and renovation work already so our business together is just one part of his work, which sometimes can cause some scheduling conflicts but we have worked thru it pretty well.Tenants pay rent direct electronically or by bank depositI sign the leases here and send electronically, with the maintenance guy handling the paperwork and also witnessing the signing.He gets paid about 1/2 of what a full service PM company would per month for being available and responding to minor repair calls (1 hour), and 1/2 a months rent for handling showings and performing in-person screening.  

Most roofers will not perform a large job unless the investor or home owner can show they have the funds to pay when the work is complete.

As far as you bringing in your work income, that's not relevant because you'll want to see how the property performs on its own.

Again, it is a gray area) you perform renovations or even just cosmetic fixes on these houses that you buy and later resell and/or a substantial percentage of your income came from flipping, well then chances are that they'll determine that you ARE in the flipping business and you can kiss goodbye any dreams of only paying long term capital gains rates on the profits for any flip homes held for more than a year!

I'm very new to the idea of investing in notes generally, and I have a question regarding non performing notes specifically: I feel like I heard/read somewhere that it's not legal (or not ethical?) 

I always hold 10% for 30 day after incase there is an issue later or during the inspection something comes up on work they performed they will come back and fix any issues quickly.

They KNOW the market, they have a stellar repair team, they market our homes very well, our performance is aligned (meaning, they charge based on rent only, they don't nickel and dime me), they have good accounting practices, and they use a web software that I can log into so I can always get the financial reports, details on repairs, etc - anything I need.  

This way you collect $1100/mo until they're able to perform on the purchase and they are getting rent for $900/mo and $200 towards closing/purchase saved up.I have attempted this with a tenant in the past but did not successfully implement it.