Being a Private Lender...

[Account Closed]

I'm working through a broker that does all the underwriting/paperwork/recordings/foreclosure (if need be), where I only need to fund the transaction acting as the private lender on the note & deed of trust.

I personally don't want to lend out of my personal name since anyone can do a public search to find out how much $ I have in the bank. I've also been reading that lending from a LLC won't be a bad idea for asset protection (outside liability).

What entity have people been using for private lending, or are there any recommendations?

Are there any other considerations to factor in?

I understand that the interest earned is fully taxable. Is there any way to reduce my tax liability? I'm not a tax guy by any means but would it be advantageous to do private lending from an LLC that owns a rental property?

[Ann Bellamy]

If you operate your lending as a business, you should lend from an entity. You will then be able to set up a solo 401(k) (talk to your accountant to see if you qualify) and lend from that as well. Similar to lending from your Self Directed IRA, so it's tax deferred or tax free if it's a Roth.

I do know people who lend in their personal name, but none of my attorneys recommend it.

Think about it - if you have to foreclose, you are then on chain of title and your liability exposure is higher than if you were simply the mortgagee.