Yes you are right that if the borrower defaults your exit strategy would be foreclosure unless you want to sell your non performing note for pennies on the dollar.

I closed on two properties last year, and both have been performing about the same, so I'll provide details on one just so folks who are considering can know some details.Purchase price $98,900, ~25% down, 4.375% interest rate 30 year fixed mortgageThe assessed price for the properties were lower than the purchase price, so I had to provide additional cash during closing (which is why the downpayment turned out to be more like 25% rather than 20%).  

@Chris Blount..I  perform basic estimates, but If it's a major problem, I get contractor in after house under contract(only)..Basically, during  inspection period...I also work with some good handymen for pricing...HVAC, Roof, Plumbing, Electrical(licensed unless it's minor)...If moving forward with deal most will come out, but might charge a small fee...Once your'e doing deals, no fee...

For the space a (void analysis) needs to be performed.

Once they are ready, they can upgrade to Aquisitions manager and fly solo.The overall goal is to get to a position where we just have to oversee these positions, solve problems as they come up and track performance. 

how often do you perform inspections and do you charge me for them?

When you say my properties are under performing, you mean cash flow wise, correct?

That's how I came to RE and BP...the latest episode with Bob Malecki got me very intrigued with notes.Now that I've read a whole lot about performing, NPNs, all the ways that it's finance and not RE, the myriad things you need to know about each level of the note ecosystem and the laws that apply to each place, etc...I'm not scared off!  

I have recently seen a lot of tapes come across that are for re-performing firsts. 

Does he have a track record of performing such projects?