I never said these things were illegal or COULD not be prosecuted but its just as likely a lazy District Attorney as a lazy cop!

Illegal offering of investments, especially to investors for which the investment risk is "inappropriate" is an ongoing serious matter; as is outright fraud on the part of sponsors. 

I don't think you are going to be able to get insurance for two separate living units in a single-family when they are both illegal and likely do not have the correct egress windows (basement) for fire safety which could subject you to huge liability if something happens to either party.

In these markets, I would be worried about crime, activity of illegal immigrants, and such. 

The lender may figure if the borrower had this kind of money they’d be making the mortgage payments. 

If they didn't have one, it may have been illegal for them to raise money from you.

Quote from @Deborah Wodell: I’m looking to connect with private money lenders or investors who lend their own funds for real estate deals.

Renovating usually means you need money to renovate.

It is clear from the interview that their main skill set is raising money and they partner with other "Co-GPs" who focus on the operations. 

I am a twenty year plus licenses GC who has built over 100,000,000. in commercial and residential construction in the NY, NJ, PA, CT and CA marketplaces. I have flipped new homes and townhomes but phased out raising a...