Oh, I agree that it is a good idea to form an LLC to hold PN/NPN. I have actually already created one, and plan on being as diligent as possible with book keeping / record keeping / accounting, in order to preserve the veil of limited liability as much as possible.
More than anything else, one of my character traits is to drill down to the dirty details as much as possible in order to understand how things work. It's probably the engineering side of my personality. Instead of just accepting conventional wisdom I prefer to ask a bunch of questions until I really understand how things work in the real world. In this case, the conventional wisdom is to hold these assets in an LLC for liability protection, since lawsuits are part and parcel of the note investing business. I trust that this is the correct thing to do, but I feel like the protection offered is overstated, or I don't fully understand how to correctly utilize these entities to maximize protection.
I still don't think I fully understand the best way to protect assets, but i'm fine with that for now. Maybe when I have a larger portfolio I will revisit this topic. And of course I will talk to attorneys along the way to see what nuggets of wisdom they can inculcate.
Thank you for taking the time to answer all of my silly questions @Adam Adams, and happy holidays!