Legal Question in Investment Law in California

Re: Independent Real Estate Investment

No, security or collateral is not something that is mandatory. However, you may be overlooking the real issue here. If, as it sounds, you are asking other people to invest money (or anything) in real-estate rehabilitation projects that you manage, promote, own, etc., you are selling securities and you may also be engaging in activites that require a real-estate broker's license.

Please be informed that taking other people's money on any kind of an investment premise is, for practical purposes, illegal unless you can explain why it's legal. The securities laws cover almost any kind of investment deal, and unless it's registered or you can point to the exemption from registration you're relying on, it's illegal and possibly criminal.

At a minimum, you need to consult an attorney about (a) how to qualify for an exemption under California (and/or federal) law, and (b) what to disclose and how to disclose it in a prospectus or private-placement memorandum or other disclosure document.

Small size and informality to not legalize promoting an investment. Only disclosure and registration or qualifying for one of the exemptions can begin to insulate you from possible serious liability.