Legal Question in Business Law in Texas

1. The licensing requirements for managing others' registered securities are beyond my area of expertise, but I know they are extensive and expensive.

2. Whether it's smart to mix real estate and securities investments in the same entity is a critical question, the answer to which is almost always "no." Nothing per se illegal about it though.

Whenever you raise money from others to invest in securities or real estate, you are selling a security. Depending on the amounts raised, the number of investors and their financial capabilities and locations (in one state or multi-state), you can be subject to all kinds of disclosure and/or registration requirements. The starting legal expense for such matters is about $10,000 and can run to the millions (securities public offering). If you want to "go naked" and just raise the money with a handshake or a contract you draw yourself, you need to pick investors who won't sue you if anything goes wrong; we used to call this the "good loser" exception to the securities laws. You need good losers because, without proper legal documentation and vetting of your investors' qualifications, you may well be in a situation where a disgruntled investor can sue you successfully just because he lost money, irrespective of whether you do anything wrong. If this venture is going to involve serious money, you'd best budget for significant legal expense.