Hes asked us to mangage his property because we are familiar with the laws and regulations of our state.

Philadelphia has a lot more regulation on three units vs two - such as additional things you have to provide to tenants.If you can get the added income without the extra unit it might be worth keeping it at two units.Do you already have the heat separated between those two units?

I tend to buy in the Southern half of the US for 3 reasons:1) you get much higher year-round occupancy rates in the South & it’s simply tough to earn a good ROI in the North if your place sits vacant for a big chunk of the year2) Culturally, the Southern half of the US seems to be a lot more accepting of STRs regulation-wise.

Supposedly has his own construction company and claims to be private money lender.( how or are they regulated ?

So i understand different regions handle escrow somewhat differently, different customs and regulations. 

Typically REIC's are not regulated by the SEC, but I was wondering if the club introduced the deal and managed the property would that transaction be considered security then? 

For example, I use for myself Tickmill ( this one: https://forex-up.com/broker-reviews/tickmill-review/ ), because it is regulated by the financial authority of United Kingdom (Financial Conduct Authority), so that its clients trading investments are under the firm protection.

You would be telling them it’s a residential loan, which has a much different risk level and regulations attached to it, when in reality it’s an investment loan.

LLC is likely most common but you need to be aware of the SEC regulations when raising money.

There are also banking regulations in place that weren't there before, forbearance options for conventional loans, and checks being cut to individual families (though those amounts won't last many very long), so who knows.I'm not saying you're wrong, the true effects (and therefore opportunities) will take time to manifest (especially around foreclosures), but I'd not depend too much on what happened roughly a decade ago to tell us exactly how this one will play out.