Has anyone here bought a note on a property they already knew from doing work there

The distinction you're drawing between comfortable and informed is the right one to sit with, and your numbers give me something specific to work with.

At 74 cents on a $112k balance you're carrying roughly $82,880 in deployed capital. The yield modeling at sub-10 annualized assumes the borrower performs through to the balloon. That assumption is doing most of the work here, and it becomes load-bearing precisely because of the balloon structure, so let me put that exit squarely in frame.

Your borrower is 61. In nine years she or he is 70. Refinancing a balloon at 70 depends on income, health, and whatever the lending environment looks like in 2033 or so, none of which you control. If the borrower cannot refinance, you either extend the note (your call, your negotiation), accept a deed in lieu, or foreclose on a property you already know and probably like. That is a real scenario, not a tail risk.

The property knowledge was genuinely informative on collateral condition. You walked the slab, you knew the water heater, you knew the neighborhood. That is real due diligence and it is relevant because your security in a default scenario is that real estate. Collateral quality matters. So that part of your comfort was earned.

Where personal familiarity can quietly, or rather, where it can distort things, is on borrower credit. Knowing someone paid an invoice same day and has 14 years of payment history are both signal, but they are different signal. One is a transaction, one is debt service behavior. Fourteen years clean on a fixed debt is meaningful. I would want to know whether a formal servicer pulled the payment history independently before you closed, or whether you verified it through the note seller alone. A seller carrying paper who wants to exit has motivation to present the cleanest picture available.

Who is servicing the note now, and did you get independent payment history verification before close?