What are the legal req'ts for an investor pool that gives loans to a business which flips homes

[Adam P.]

I've gotten several different perspectives on the following scenario and am trying to figure out the correct path here. Here is what I'm trying to accomplish:

• I'd like to pool investor money to offer loans to a business
• That business flips ~100 homes a year.
• The fund and business are both located in CA.
• Each loan would be funded *before* the home is purchased (often on the courthouse steps). 6 month term, 1 pt, 10%.
• The business receives title on the home within about 10 days of purchase. After receiving title it will sign it over to the fund.
• The allocation of loan ownership will be based on % of capital in the fund. E.g. if this is a $5M fund and one investor has $500K invested, they will own 10% of the loans outstanding at the time.
• Every 6 months the fund will give investors the option to divest / re-invest. If divest, the investor will receive principal + their percentage of earned interest, less management and carry fees for the fund, as loans are paid back. In theory, they should gain full divesture within 6 months of request to divest.
• Like most funds, the investors will invest into an LLC that will be managed by another entity.

Questions:

• What body of regulation would this fall under? Would this be mortgage brokering? A bank? Something else? 
• What if any licenses are needed by the fund and any individuals at the fund?
• What is the best legal structure for the management company - S-Corp or C-Corp or something else?

Thanks!