Quarterly Update - 2012 Q3

October 2012

Dear Rubicon Mortgage Fund Investor: 

The Management at Rubicon Mortgage Fund, LLC (“The Fund”) is pleased to announce that The Fund yielded8.02% return for the first three quarters of 2012 (this figure assumes investors compounded their returns monthly).  Management remains confident that The Fund will continue to realize the same successes as it has had for the past nineteen quarters.

The Fund currently has 31 “performing” loans in its portfolio. The Fund is also holding three REO properties. During the third quarter of 2012 The Fund made seven new loans totaling approximately $3,800,000. The Fund also received two pay offs from current borrowers. The Fund consists of only First Trust Deeds currently securing its investments.

Loan and REO Status Updates:

Emigrant Gap (REO):
The Emigrant Gap loans totaled $300,000 in principal that was collateralized by seven separate parcels of land.  The Fund has taken ownership of all seven parcels via foreclosure and has successfully sold six parcels; thus far collecting $258,000 net of expenses. The only remaining parcel is currently listed for sale which should make the fund whole.

Calpine Lodge (REO):
The Calpine Lodge was a 1st Deed of Trust loan secured by a 7,200 square foot bar and restaurant, apartment and an additional 12 room motel located in Calpine, CA.  The Fund had made a “seller carry back” loan for $515,000.  As you may recall, the property was significantly renovated after being sold to our buyer in early 2011 (as a result of flood due to a broken water pipe).  Unfortunately, after almost a year of managing this under-performing note, Rubicon has foreclosed again on the property.  Prior to our foreclosure of the property, the borrower completed a significant remodel of the lodge by investing over $100,000 in improvements.  Management decided to further renovate the motel and apartments units for the purpose of maximizing its sale price, as well as making the property more desirable to lease.  The most recent remodel is finished and the property is showing well in its newly refurbished condition. The brokers continue to tell us that they have interest,but have yet to present us withany written offers. Management also declined two separate lease offers, due to lack of financial strength of the proposed tenants.

Other news:

The Fund’s Investor base continues to grow at a steady pace.  We have33 new members invest in The Fund during 3rd quarters. Furthermore, we sawsignificant increases from existing investors add to their accounts.  This continued growth has allowed The Fund to expand its pool of loans, thereby creating more diversification and liquidity for all of our Investors.

Interest rates and fees:

Due to lower interest rates and the desire of Management to lend on quality deals, both our rates and fees are lower than in past years.The downward trend in yields is evident throughout our industry.   This quality first approach has and will affect both Investor yields and performance fees to Management. Our targeted rate of return in January 2012 was 8.5% assuming yields that were compounded. Based on the lower yields now in the marketplace we now feel a compounded return close to 8% is more realistic. Our objective will remain focused on risk, and we are willing to have both lower returns for our Investors and lower performances fees for Management in the process. Capital preservation will override unnecessary risk.

We are also excited to announce that Rubicon is now linked with Facebook! If you happen to find us on your Facebook page, please check us out and “like” our page.

Please note that our best sources of referrals come from our current stable of Investors.  Please feel free to give our contact information to any interested colleagues, and as always, contact us directly with any questions.


Rubicon Management