Note investing, need an LLC?

4 Replies

I have just acquired my first note via pprnoteco.com and was wondering if I should set up an LLC? Are their safe guards with this strategy as well as tax write offs? Or does owning it as an individual not make a difference ?

Thanks

There are no tax implications. The main reason to get an LLC is so your personal name does not show up on public records. You should set up the LLC and purchase in the name of the LLC before buying. If the deal hasn't already closed and documents recorded, you might want to get that done. Let PPR know your intentions.

Unless you are buying many assets into the same entity, you may want to use a Personal Property Trust to take the assignment. The trust will provide a shield when recorded so your name is not public and the trust is not publicly recorded like an LLC. The LLC would be better for liability protection if you need it, but more expensive to create and maintain than a personal property trust.

I use a PP trust for all of my JV note acquisitions, and have a federal tax ID assigned to each for reporting purposes.