What are the legalities if I have set up a website about real estate investing and want to charge $25/month for membership with a max membership cap of 100,000 members?

UPDATED: Sep 29, 2022

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What are the legalities if I have set up a website about real estate investing and want to charge $25/month for membership with a max membership cap of 100,000 members?

I want to take $20 of each members payment and buy property to flip, rent or sale then take the profits each month from all properties and put it in a pool to split with all 100,000 members. How do I set this up legally?

Asked on October 5, 2015 under Real Estate Law, North Carolina


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 7 years ago | Contributor

What you do is you hire an attorney to research this and, if it is legal as you want it structured, set it up for you. What you ask is very involved, and implictes among other things, both federal and state securities laws you may need to register and conform to requiements about disclosures and reporting--it's also possible you don't, but with  up to 100k members investing, it's certainly possible that you do, FTC rules about advertising,  state laws about acting as a real estate broker, state and federal tax law, etc. Again, it could be that at the end of the day, this will be simple to do--but there are two many areas of law that could be involved, including ones that are very technical e.g. securities and tax law and which have very high penalties for violations, for you to not have this reviewed and structured professionally. 
If you feel you won't make enough money to justify the cost of an attorney, then you shouldn't do this it's too potentially risky to do if you have a very low expectation of return.

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