I wold by the front end payments on some performing notes.  

I have commercial clients that buy different types from value add to fully performing.Even fully performing there could be other value like it comes with a commercial parcel for putting a strip center on or the occupancy rents per sq ft are half of going market.You can do well with commercial though it takes more cash.

Test score performance is directly related to neighborhood demographics...

(you will come a cross a lot more confident in your offers or just talking to sellers when you have at least two more nearly as good deals to make) The above action will dramatically increase your chances to be able to negotiate much more realistic deals for you that you will be able to perform (close) on. 

Before I ask this, I know people are going to respond that it depends - and I know that it is true that it does depend - but I'm not asking for an exact answer, just a rule of thumb/ball park of what a reasonable discount rate for determining the price to pay for a non-performing 2nd note?

Louis.The next step was performing market research.

More than one-half of the personal services you perform during the year in all trades or businesses are performed in real property trades or businesses in which you materially participate.

For that price of $400-600k, you could buy 4-6 properties out-of-state easily that would all cash flow and you'd then have the tax benefits and security of 4-6 doors versus dumping all your money into a low- to non-performing property and hoping nothing goes wrong with it.

@Joshua Nudell   not going to buy performing NOTEs for pennies on the dollar.. and the notes flucate with the rebound in the economy..

Most guys will start you off with a little then give you more as you perform and they compare your return and security to their other investments.