Selling interest in partnership

[Ivan K.]

Does anyone know if one has to be licensed to sell interest in a partnership to invest in real estate in the state of California? for example, if I want to gather 4 investors,each with $100k, would this be like a private placement, in which case I would have to be licensed for selling a "security?"

[Bryan Hancock]

Let me preface this by saying it is not legal advice and I am not an attorney. You should talk to an attorney.

If all parties are identified up front, know the terms, and agree to them I think you can likely just do a limited partnership. If the investment is only $400k I would think you could get away with not doing a PPM.

One thing you may consider doing is giving the LPs voting rights to make it clear that they are not buying solely securities. A good attorney that is familiar with exemptions in your state should be able to help. I doubt you need a securities attorney. A "regular" attorney will likely be just fine.

Are you raising money just in California or are some of the investors in other states?

I am assuming that the hedge fund model means you are taking a promote for your efforts in identifying and managing the project? Are the other parties going to be able to vote on what happens?