Q: Your target return is 9.5–13.5%. Why such a wide range?

The range reflects two things: deal mix and capital velocity. At the lower end (9.5–10.5%), returns reflect periods where we hold more loans on balance sheet at standard note rates with modest origination fees — predictable, steady income. At the upper end (11.5–13.5%), returns reflect periods of higher origination volume, where we are collecting 2–3 points on shorter-term loans and realizing gain-on-sale income from selling certain loans to institutional buyers at a premium. The hybrid model — holding some loans, selling others — is how we consistently beat straight note-rate returns. The 12.45% compound annualized return we cite represents our actual performance average, which has historically landed in the upper half of the target band.

Q: How do you achieve a 10–12% return when your average note rate is only 8.59%?

The note rate is only one of three revenue layers: 1. Interest income: 8.59% annualized on every loan in the portfolio 2. Origination fees (points): Typically 1.5–3 points charged at closing. On a 12-month loan, 2 points = +2% annualized yield 3. Gain-on-sale premium: When we sell loans to institutional buyers, we typically sell at a premium to par, generating additional income that compounds the overall return Combined, these three layers on a 12-month loan at 8.59% with 2 points would produce an effective yield of approximately 10.59% — and our hybrid model captures gain-on-sale income on top of that for select loans. Capital velocity matters too: the faster we can recycle capital from paid-off loans into new originations, the more fee events occur per year, pushing the annual return higher.

Q: Are returns guaranteed? What if you have a bad year?

No returns are guaranteed — any firm making that claim is violating securities law. What we can offer is a 12-year track record with no calendar year in negative territory and a compound return of 12.45% annualized. Our return is structurally more stable than equity investments because it derives from contractual interest payments on secured loans, not market sentiment. Borrowers are obligated to pay regardless of what the stock market does. The primary scenario that would pressure returns: a severe real estate market crash coinciding with a wave of simultaneous defaults. Even in that scenario, our first-position liens and conservative LTVs provide a substantial recovery buffer. Our stress testing assumes 20–25% property value declines on all loans simultaneously — the portfolio remains solvent under that scenario.

Q: How does the 79.76% cumulative return compare to compounding? What's the math?

$100,000 invested in January 2021 and compounding at 12.45% annually for 5 years (Jan 2021 – Dec 2025) produces: Year 1: $112,450 Year 2: $126,450 Year 3: $142,182 Year 4: $159,883 Year 5: $179,760 That's a $79,760 gain on a $100,000 investment — precisely the 79.76% cumulative return we report. For comparison, the S&P 500 over the same period was significantly more volatile: a −18.7% year in 2020, followed by recovery — with investors who panicked and sold during the drawdown locking in losses. Our trust deed investors had no such drawdowns to weather.

Q: When and how are returns paid out?

Monthly. Interest accrues daily and is distributed to investors on the first business day of each month. As a trust deed investor, you hold an individual loan position and receive the borrower's monthly interest payment directly, net of servicing fees. Investors may elect to have distributions reinvested automatically (compounding effect) or paid out to their bank account via ACH. You can change this election at any time with 30 days notice.

Question 1

What happens to my investment if a borrower defaults?

Accepted Answer

MCF Real Estate Capital holds a recorded first-position lien on every property we lend against — meaning we are the senior secured creditor. If a borrower defaults, we initiate foreclosure proceedings on the collateral property.

Because our average loan-to-value (LTV) is 68.2%, there is typically significant equity between the outstanding loan balance and the property's market value. In California, a non-judicial foreclosure typically completes in 4–5 months. After the foreclosure sale, investor principal and accrued interest are recovered from the proceeds before any junior lien holders or equity owners receive anything.

In our 12-year history, we have never experienced a loss of investor principal on a first-position loan.

Question 2

What if property values drop 20–30%? Is my principal still safe?

Accepted Answer

At a 68.2% average LTV, a 30% drop in property value would bring the LTV to approximately 97% — meaning you'd be close to break-even on principal in a worst-case forced sale scenario. However, several layers of protection exist before that outcome:

1. We require independent third-party appraisals before funding — not broker opinions.
2. We stress-test every deal at values 15–20% below appraisal before approving.
3. Short loan durations (typically 6–18 months) reduce the time window for market deterioration.
4. Title insurance and hazard insurance are required at closing on every loan.

During the 2020 COVID market disruption and the 2022 rate-driven correction, our portfolio experienced zero principal losses.

Question 3

Is this investment FDIC insured or SEC registered?

Accepted Answer

No — and any firm telling you their private lending product is FDIC insured is misleading you. FDIC insurance covers bank deposits, not investment products.

MCF Real Estate Capital's trust deed investments are offered to accredited investors as direct, secured lending positions — you are the lender of record on a specific loan, with your name recorded on the deed of trust. Trust deed investing is regulated under California real estate and lending law rather than as a pooled securities offering.

Your protection comes from the collateral (first-position real estate liens), conservative underwriting (sub-70% LTV), and our 12-year track record — not government deposit insurance. We encourage every prospective investor to review the loan package and underlying documents with their own attorney or financial advisor before investing.

Question 4

How is this different from an unsecured private loan or peer-to-peer lending?

Accepted Answer

Critically different in three ways:

First, every MCF loan is secured by recorded real property — not a promise to repay. If the borrower disappears, the asset remains and can be seized through foreclosure.

Second, we hold first-position liens only. Many peer-to-peer platforms and some private lenders take second or third position, which means they only recover funds after the first lien holder is paid in full. In a default scenario, second-position holders frequently recover nothing.

Third, our average LTV of 68.2% means borrowers have substantial skin in the game. A borrower with 32% equity in a property has a strong financial incentive to keep making payments.

Question 5

What is your actual default rate and loss history?

Accepted Answer

Since 2013 across 1,238 funded loans and $525M+ in deployed capital:

• Loans that went to formal default proceedings: <4% of total loans funded
• Investor principal losses from defaults: $0
• Cumulative net return to investors (Jan 2021 – Dec 2025): 79.76%

We are willing to share anonymized loan-level data on our default and recovery history with prospective investors who have executed an NDA. Ask your investment team contact to arrange this.

Question 6

Your target return is 9.5–13.5%. Why such a wide range?

Accepted Answer

The range reflects two things: deal mix and capital velocity.

At the lower end (9.5–10.5%), returns reflect periods where we hold more loans on balance sheet at standard note rates with modest origination fees — predictable, steady income.

At the upper end (11.5–13.5%), returns reflect periods of higher origination volume, where we are collecting 2–3 points on shorter-term loans and realizing gain-on-sale income from selling certain loans to institutional buyers at a premium. The hybrid model — holding some loans, selling others — is how we consistently beat straight note-rate returns.

The 12.45% compound annualized return we cite represents our actual performance average, which has historically landed in the upper half of the target band.

Question 7

How do you achieve a 10–12% return when your average note rate is only 8.59%?

Accepted Answer

The note rate is only one of three revenue layers:

1. Interest income: 8.59% annualized on every loan in the portfolio
2. Origination fees (points): Typically 1.5–3 points charged at closing. On a 12-month loan, 2 points = +2% annualized yield
3. Gain-on-sale premium: When we sell loans to institutional buyers, we typically sell at a premium to par, generating additional income that compounds the overall return

Combined, these three layers on a 12-month loan at 8.59% with 2 points would produce an effective yield of approximately 10.59% — and our hybrid model captures gain-on-sale income on top of that for select loans.

Capital velocity matters too: the faster we can recycle capital from paid-off loans into new originations, the more fee events occur per year, pushing the annual return higher.

Question 8

Are returns guaranteed? What if you have a bad year?

Accepted Answer

No returns are guaranteed — any firm making that claim is violating securities law. What we can offer is a 12-year track record with no calendar year in negative territory and a compound return of 12.45% annualized.

Our return is structurally more stable than equity investments because it derives from contractual interest payments on secured loans, not market sentiment. Borrowers are obligated to pay regardless of what the stock market does.

The primary scenario that would pressure returns: a severe real estate market crash coinciding with a wave of simultaneous defaults. Even in that scenario, our first-position liens and conservative LTVs provide a substantial recovery buffer. Our stress testing assumes 20–25% property value declines on all loans simultaneously — the portfolio remains solvent under that scenario.

Question 9

How does the 79.76% cumulative return compare to compounding? What's the math?

Accepted Answer

$100,000 invested in January 2021 and compounding at 12.45% annually for 5 years (Jan 2021 – Dec 2025) produces:

Year 1: $112,450
Year 2: $126,450
Year 3: $142,182
Year 4: $159,883
Year 5: $179,760

That's a $79,760 gain on a $100,000 investment — precisely the 79.76% cumulative return we report.

For comparison, the S&P 500 over the same period was significantly more volatile: a −18.7% year in 2020, followed by recovery — with investors who panicked and sold during the drawdown locking in losses. Our trust deed investors had no such drawdowns to weather.

Question 10

When and how are returns paid out?

Accepted Answer

Monthly. Interest accrues daily and is distributed to investors on the first business day of each month.

As a trust deed investor, you hold an individual loan position and receive the borrower's monthly interest payment directly, net of servicing fees.

Investors may elect to have distributions reinvested automatically (compounding effect) or paid out to their bank account via ACH. You can change this election at any time with 30 days notice.

Question 11

Can I get my money out whenever I want?

Accepted Answer

Trust deed investing is not a liquid savings account — your capital is committed to a specific loan for the life of that loan. Here is what that looks like in practice:

• Typical loan term: 6–18 months (most loans pay off within 12 months)
• Your principal is returned when the borrower pays off or refinances the loan
• There is no secondary market for individual trust deed positions

Because loans are short-duration, investors who want to step back can simply decline to fund the next opportunity and recover principal as their existing loans mature. For investors with a 3–5+ year horizon, recycling capital across successive loans is how returns compound over time.

If you may need the capital back on a fixed near-term date, trust deed investing is not the right fit — pick loans whose terms match your timeline, or wait for the right deal.

Question 12

What is the minimum investment?

Accepted Answer

Trust Deed (individual loan) investing: $50,000 minimum per loan position, with a recommended minimum of $200,000 to achieve meaningful diversification across 4+ loans.

We do not accept investments below these minimums. This is not a crowdfunding platform — our structure is designed for accredited investors deploying meaningful capital with a multi-year horizon.

Question 13

Do I have to be an accredited investor?

Accepted Answer

Yes. MCF Real Estate Capital's trust deed offerings are made available only to accredited investors as defined by the SEC.

You qualify as an accredited investor if you meet one of the following:

• Individual income exceeding $200,000 in each of the last two years (or $300,000 joint with spouse)
• Net worth exceeding $1,000,000, excluding primary residence
• Certain professional certifications (Series 65, CFA, etc.)
• Entities with assets exceeding $5,000,000

We verify accredited investor status through a third-party verification service as part of the onboarding process. This is a legal requirement, not a preference.

Question 14

Can I invest through my IRA, LLC, or trust?

Accepted Answer

Yes — all three are common structures we work with.

Self-directed IRA: You need a self-directed IRA custodian (we work regularly with Equity Trust, Entrust Group, and uDirect IRA). The custodian holds the investment on behalf of your IRA. Gains compound tax-deferred (traditional IRA) or tax-free (Roth IRA). There are specific IRS rules around self-directed IRA investments — consult your tax advisor.

LLC or corporation: We accept investments from single-member and multi-member LLCs, corporations, and other entities. The entity must itself qualify as an accredited investor.

Trust: Revocable and irrevocable trusts are both accepted. The trust document must authorize alternative investments — many standard trust documents include this language.

Our onboarding team handles the documentation for all entity types. Average onboarding time is 5–7 business days.

Question 15

How do I know you're not just telling me what I want to hear about your track record?

Accepted Answer

Fair question. Here is what we make available for verification:

1. Loan-level data: We will share anonymized loan histories (origination date, loan amount, LTV, status, payoff date/default outcome) for our entire 1,238-loan history under NDA.
2. Third-party servicer records: All loan payments flow through FCI Lender Services, an independent third-party servicer. Their records are verifiable.
3. Tax documents: Existing investors receive annual K-1s and 1099s reflecting actual distributions — these are filed with the IRS.
4. References: We will connect you with current investors (with their permission) who can speak to their actual experience.

We cannot reconstruct fully audited financial statements for every year of our history — early-stage private lending operations rarely have full audit trails — but we are transparent about what documentation exists and what doesn't. If any firm in this space claims a perfect audit trail back to day one, ask to see it.

Question 16

Who services the loans? What happens if MCF Real Estate Capital shuts down?

Accepted Answer

Loan servicing is handled by FCI Lender Services, an independent third-party servicer. This is intentional — your investment is not dependent on MCF Real Estate Capital's operational continuity.

If MCF Real Estate Capital were to cease operations:

• Your recorded lien on the property remains fully intact — it is a public legal document
• FCI Lender Services would continue to collect payments on your behalf
• You can engage a new servicer at any time or collect directly from the borrower

The real estate collateral and the recorded liens are the ultimate backstop — not MCF Real Estate Capital's balance sheet or goodwill.

Question 17

What fees do you charge? How are you compensated?

Accepted Answer

As a trust deed investor, the economics are straightforward:

1. Origination fees from borrowers: MCF Real Estate Capital charges borrowers 1.5–3 points at closing. These are paid by the borrower at funding and are how MCF Real Estate Capital is primarily compensated for sourcing, underwriting, and structuring the loan.
2. Loan servicing fee: A small monthly servicing fee is paid to the independent third-party servicer (FCI Lender Services) and is netted from the borrower's monthly payment before it is remitted to you.

You receive the note-rate interest on your loan, net of the servicing fee. There are no management fees, performance fees, redemption fees, or hidden costs charged against your principal. All fee arrangements are disclosed in the loan documents you sign before funding.

Question 18

What kind of reporting will I receive as an investor?

Accepted Answer

Monthly:
• Portfolio statement showing your balance, interest accrued, and distributions paid
• For trust deed investors: individual loan status updates

Quarterly:
• Performance summary across your active trust deed positions
• Portfolio composition report (LTV distribution, loan type mix, geographic spread)

Annually:
• K-1 (partnership income) or 1099-INT as applicable
• Full-year performance report with benchmark comparison

On demand:
• Direct access to your investment team contact via phone or email
• Online investor portal for real-time balance and transaction history

We do not believe in "black box" investing. If you have a question about a specific loan in your portfolio, you can call and get an answer from the person who underwrote it.

Question 19

Have you ever had investor complaints, regulatory actions, or litigation?

Accepted Answer

We have not had any regulatory actions, SEC enforcement proceedings, or investor arbitration awards against MCF Real Estate Capital or its principals.

As with any lending operation, we have had occasional disputes with borrowers over loan terms, default notices, or foreclosure proceedings — this is a normal part of commercial lending. None of these borrower disputes have resulted in losses to investors.

We encourage prospective investors to conduct their own background checks on our principals. Our key principals have clean FINRA BrokerCheck records (where applicable) and no civil judgments related to investment activities. We will provide principal names and entity registration details to any prospective investor who requests them.

Question 20

What is the onboarding process and how long does it take?

Accepted Answer

Typically 5–10 business days from initial conversation to funded investment:

Day 1–2: Introductory call with your investment team contact. We explain how trust deed investing works, answer your questions, and confirm the loan criteria (geography, loan type, LTV range, term) that fit your goals.

Day 2–4: We send you the framework lending agreement and accredited investor verification request. You review with your attorney or advisor.

Day 4–6: You return executed documents and accredited investor verification. We open your client escrow account with our independent third-party servicer.

Day 6–10: You wire funds into your escrow account. Once onboarding is complete we begin presenting available loan opportunities that match your criteria — you select deals and fund within 48 hours of approval.

Question 21

What documents should I review before investing?

Accepted Answer

At minimum, you should review:

1. Framework lending agreement — the master document governing your relationship with MCF Real Estate Capital across the loans you fund.
2. Loan-specific package — for each deal you consider: the independent appraisal, borrower profile, property details, and proposed loan terms.
3. Promissory note and deed of trust — the instruments you receive at closing that establish the borrower's obligation and your recorded first-lien position.
4. Servicing agreement with the independent third-party servicer (FCI Lender Services).

We strongly recommend reviewing these with a real estate attorney or independent financial advisor before funding. We will not rush you through this process. An investor who fully understands what they own is a better long-term partner than one who funded quickly without understanding the structure.

Question 22

Can I speak with current investors before committing?

Accepted Answer

Yes. We maintain a list of current investors who have agreed to speak with prospective investors about their experience. We will make introductions on request.

We ask that you come to these conversations prepared with specific questions — our existing investors are busy people who have graciously agreed to share their experience, and we want to respect their time.

Typical topics current investors are willing to discuss: how distributions have actually landed vs. expectations, communication quality from the investment team, how they think about trust deed investing relative to other alternatives in their portfolio, and what they wish they'd known before funding their first loan.

The hard questions, answered directly.

Protecting your principal: collateral, liens, and loss history

Still have questions?