What type of entity?

[Eric Armstrong]

What type of entity should you create if you(2 people) are going to be a private lender for fix and flips? Would it be any different if you were going to hold notes? Thx Eric

[Bob Malecki]

Well, if you are planning to do multiple deals with the same 2 parties then a LLC would most likely be the one to use, since it passes through the profit/losses to the members, provides asset protection and is relatively low cost to create and maintain. The LLC operating agreement would outline the structure of the venture and roles of the members as well as windup and dissolution.

For one-off projects I like using a trust where each party has a beneficial interest in the trust and the trust owns the asset or provides the loan. This would also require a joint venture agreement that outlines the aspects of the partnership between all parties. A trust is not an asset protection entity though, but as @Troy Fisher cites, asset protection is not necessarily needed if you are just lending money.