Legal Question in Business Law in California

Re: Follow-Up: Forming an Investment Club (Partnership-LLC)

Lenders won't lend without substantial assurances of repayment. If the loan is to acquire real property, they will want a down payment and a deed of trust. Usually they will also require a borrower with a good credit history and visible income from which to make the payments. These requirements make it tough for a new organization of any kind to borrow on favorable terms. More likely than not, the investors in your proposed organization will have to go 'at risk' in some way or another -- either substantial contributions of equity capital, personal guarantees, or the general partnership form of organization (which puts everyone at risk!).

Because you are raising money from other people and proposing to form business entities, I repeat my previous advice that you retain an attorney to advise you on securities law and business entity selection and formation. There is substantial potential for litigation down the road in what you're proposing to do -- be very careful.