Mass Private Capital - Mass Private Capital

Frequently Asked Questions

Products

What investment products does your Company offer?

We currently offer short-term notes (“Note”) that link to real estate hard money lending loans.

What do I own exactly when I invest in these Notes?

You own Payment Dependent Notes issued by a Special Purpose Entity (“SPE”) affiliated with our Company. The SPE owns the underlying loans or loan beneficiary interest. These notes are limited obligation of the issuing entity. Each note is linked to a real estate loan and receives cash flows from that particular loan, net of fees. The issuer entity’s obligation to the note investors is limited to the cash flows received from the underlying loans.

Am I guaranteed a return on my investment?

A return on the investment is not guaranteed, nor are the notes insured by FDIC or other public or private entities. The investment carries risk. Investors must be able to bear such risk when they choose to invest.

Are the notes secured?

The Notes are not directly secured by the loans. However, the underlying loans are secured by mortgage on the properties pledged as collateral. Although the Notes are not secured obligation of the issuing entity, the issuing entity is a special purpose entity formed specifically to hold loans and issue the matching notes. It has no other debt and no ability to incur other debt.

What is the average return on your Notes?

The net interest rates on these Notes are 9-10.5% to investors.

How often do you distribute income from the Notes?

We try to distribute income at a frequency that matches the underlying loans. Most loans pay monthly interest. Payments are usually distributed with a month’s lag. For example, the interest accrued on loans in the month of September will be distributed to the investors by the end of October.

What are real estate hard money lending loans? Why do those loans carry a high interest rate?

Real estate hard money lending loans are usually used for real estate acquisition, rehabilitation or construction. The borrowers typically work in the real estate or construction industry and use these loans to finance their projects.

For various reasons, these borrowers often cannot or are not willing to get loans from the traditional banking system. Either the loan size is too small, or the property, loan type or borrower’s personal credit do not meet bank’s lending criteria. Some borrowers also turn to hard money lenders to get a loan quickly. Because hard money lending loans are short term, the high interest rate is not necessarily burdensome to borrowers.

Who makes those loans?

Currently, all loans are originated and serviced by a lender with whom we have a working relationship.

In what geographic areas are those loans?

Currently all loans are in the states of Massachusetts and Rhode Island.

How does the originator underwrite those loans?

We and our originator use a comprehensive framework to evaluate each loan, taking into account both hard and soft aspects of credit quality. We believe that the old school banking is still the most reliable approach in secured lending. Borrowers’ willingness to pay is as important as their ability to pay. Almost all loans are to repeated borrowers or their referees who value the long term working relationship with the originator.

What are the default rates of those loans?

Our originator has been making hard money loans since 2012. There has been one default in March 2021, and the loan servicer is currently working with the borrower to resolve this. All loans since inception have been paid back 100% of the principal and interest.

What happens if a borrower defaults on a loan, or the project does not get completed?

The loan originator or our other agent will work with the borrower to minimize loan loss. The workout methods include loan modification, short sale and foreclosure. If the project is not completed when the loan defaults, we may use third party construction contractor to complete the project to maximize the loan recovery value.

Which legislation are you operating under?

Our Notes are issued under Security Act Regulation D Rule 506(b).

What are the investment minimums?

We don’t have a specific minimum. Investors can choose the amount based on their capital availability.

What if I want to sell my notes?

The Notes are restricted securities. Currently, there is no secondary market for these Notes. We have some Notes transferring mechanism available on our platform.

What is the difference between a REIT (Real Estate Investment Trust) and Taiga’s notes?

REITs own a portfolio of real estate properties with little transparency. They are not real estate debt. REIT Investors have no control over which properties to invest in.Private REITs often have a long investment horizon. Public REITs trade like stocks. Their value is subject to market price volatility.

Each of our Notes is linked to an individual loan that is secured by a property. Investors can review the loan information and choose which Notes to invest in.

Operation

What is your company doing?

We are an income-oriented investment platform. We offer cash flow driven alternative investment.

How do I get started to invest?

You can email or call us or send a message to us on our website. We will walk you through our product and service. After the introduction if you choose to invest with us, we will send you the paperwork to open an account. Once the account is open and funded, you can buy notes and build your portfolio.

How does your platform work?

Our online platform provides detailed loan information, investor portfolio holdings and transaction history. Investors can download investment statements, purchase Notes and change account settings online. All transactions are conducted online or through email and other electronic service such as e-signature.

Investors can fund the account by check or via ACH or wire. We will use the bank account that the investor registered with us to send the interest and principal payments via ACH.

Investors can also choose an automatic investment program. We will invest and reinvest the capital according to investor instruction.

Is my money safe on your platform during the gap of investment and payment distribution?

Yes. We keep investor cash in an insured bank account separate from our operating account.

What happens if you go out of business?

To safeguard investor assets, our Notes are issued from a bankruptcy remote special purpose entity. The entity is restricted from taking on debt other than the real estate loan linked notes. In the unlikely event that we go out of business, a backup servicer will be appointed to service the outstanding loans and Notes.

Investor Eligibility and Tax Treatment

Who can invest in your Notes?

Our Notes are open only to accredited investors in U.S. and foreign non-U.S. investors (not required to be accredited).

By the SEC definition, an accredited investor is a high net worth individual i) with total assets equal to $1 million or more, either alone or with one’s spouse, excluding one’s personal residence, or ii) whose income equaled $200,000 (or $300,000 with a spouse) in each of the previous two years with the expectation that the current year’s income will be the same or higher. For institutional investors, an accredited investor is an entity with assets in excess of $5 million or all equity owners of the entity are accredited investors. Non-U.S. investors are not required to be accredited.

Can non-U.S. investors invest in your Notes?

Yes, our Notes are open to non-U.S. investors (defined by IRS as non-U.S. Person). To invest, non-U.S. investors must provide a color copy of unexpired government issued photo ID, fill out the W-8BEN or W-8BEN-E form and have a U.S. bank account.

Do non-U.S. investors need to be accredited?

No, non-U.S. investors do not need to be accredited.

Are foreign investors taxed on the interest earned from your Notes?

We do not provide tax advice. Investors should consult their own tax advisor before investing.

What tax form do you send to investor for the interest earned on your Notes?

We will send a 1099-OID for each account to note investors.

Frequently Asked Questions

Products

Operation

Investor Eligibility and Tax Treatment

Disclaimer