The most I can say on this deal is that I think there is a margin of safety in the purchase given the numbers presented.

The key to any type of investing is to educate yourself as much as possible, give yourself as much of a safety cushion as you can, proceed with caution, use good ole' common sense, and get started as quickly as you can.

The issue I see is that you are essentially paying retail for the lot and not leaving yourself with a margin of safety.  

Our homeowner's policies are for those two home's as well as our personal home.

It's easier to buy a good umbrella policy (which you should have any how).

Unfortunately, I have seen many friends and other investors have to dig out of a hole because they stayed too long.I am currently taking some chips off the table by selling one of three large apartment buildings I have in the Dallas area and exchanging the payment of a hefty amount of tax In order to receive a hefty amount of safety and security.Good luck on your decision and you are lucky to have one....

But you need to make sure you are complying with the NH requirements.If you have a mortgage on it, the due on sale clause will be a bigger issue, because you will need to switch to business insurance (your current insurance won't insure you if you own in an LLC), and the mortgage company will be notified of the new insurance policy with a different named insured.  

Moreover, performing notes do not give you a great deal of a discount for the very reason that I mentioned above, they offer safety with passive and steady income.

Some of which include:Debt ServiceInsurance (proper STR insurance - not a standard fire policy)Taxes (both normal property and STR taxes)VacancyCAPEXElectricity, Cable, InternetFurnitureSheets, towels, etcCleaning/maintenance Gardening/lawn-care Etc.Im sure I missed a few - but you get the point.

No, what you primarily need is adequate insurance coverage which you would need in addition to a LLC anyway.A LLC is primarily a psychological safety net as opposed to actual.