The third-party Note Servicing company would take the buyers payment and pay the underlining lien and pay the wrap seller the difference.

But is it a totally different beast?

I do explain why and how agent's get paid and what their job is to the buyer so that they understand the price difference.

Currently in Nashville, TN, with a primary residence and a SFH rental with strong cash flow.

This is no different from not receiving a 1099-NEC for some contract work: even without a form, you must report the money you received as income and pay taxes.Final disclaimer: there's more to these rules than I mentioned, and there's room for interpretation in many situations.

Or is there a different system I should implement?

Been a Special Education teacher for 25 years- trying to retire and have studied real estate investing... realize I cannot do my own flips after buying my forever home after the hurricane... but that is a different story!

If they are spread out, could be a different story. 

I want to start with single family homes/long term rental, but also willing to try different strategies such as renting by the room/mid term. 

There's many different marketshare that are available here, but it all depends on the location and what you want to deal with.