QUARTERLY UPDATE - 2016 Q4

January 2017

Dear Rubicon Investor or Prospective Investor:

Rubicon Mortgage Fund, LLC is pleased to announce that investors who reinvested each month during 2016 received a total compounded return of 7.003%. This marks the 9th consecutive year that the fund has been profitable for its investors. Congratulations to our original investors who reinvested and compounded their money each month since we opened - you now have doubled
your money!! 

4th Quarter in Review

The Fund made fourteen new loans totaling approximately $8,300,000 this quarter and received payoffs from eight current loans with principal amounts totaling just under $5,000,000. The Fund also received approximately $4,000,000 in investment contributions.

Sale of Moss Landing

This journey was long and challenging, but in the end the Fund’s investors did well over the years. Back in 2009, the Fund purchased a fractional interest in a note secured by land in Moss Landing at a deep discount from a Southern California lender that was going out of business. We subsequently bought out the other co-investors. This November, we sold the property to a local resident in Monterey County and are carrying back a note with principal value of $760,000. Total expenses incurred (including the purchase of the note) were approximately $700,000, however total income received by the Fund was approximately $610,000 plus the value of the $760,000 note secured by a 1st Deed of Trust.

Foreclosure

In Q4 the Fund foreclosed on real property located in New Mexico. Unfortunately, the borrower had a financial crisis and could not make payments.
The amount owing is roughly $260,000 and the property appears to have ample equity to cover our debt and holding costs.

Year in Review

Given the historically low interest rate environment we are extremely pleased with the Fund’s compounded return of 7.003%. Our existing portfolio is strong and we did not compromise risk to seek higher returns. The Fund made roughly 50 new loans for approximately $30,000,000, all secured by First Deeds of Trust. We received 32 pay offs, resulting in repayment of approximately $20,000,000 and received over $12,000,000 in additional contributions.

Outlook for 2017

In 2016 the Federal Reserve made two interest rate hikes for 25 basis points each. The second was a bit of a surprise coming in December after the Presidential election, which triggered a jump in rates of 60 basis points. Subsequently the Fund has increased its rates on loans by 75- 100 basis points and the market hasn’t seemed to flinch. Given current indicators we expect that 2017 will bring additional rate increases of 50-75 basis points by the Federal Reserve. Therefore, we believe our returns will be higher next year but with rate increases also comes the likelihood of downward pressure on real estate prices, and so as always our focus will be on risk management and capital preservation.

2016 K-1 Forms

Our 2016 K-1 Forms are currently scheduled to be mailed on March 15, 2017.

The Fund's Returns Since Inception: (illustrates an account that has reinvested))

Transparency

Every investor in the Fund receives monthly account statements either electronically or via hard copy. All investors also receive quarterly updates from the manager (like this one), and a copy of the Fund’s annual audit. All of the audits, in addition to the quarterly updates, are posted online on our website. If you did not receive a document, or wish to go back and review them, please contact us, or visit the website. If you have registered for monthly distributions, you should be receiving either an ACH deposited directly into your bank account or a check sent to your mailing address. Finally, all investors should be receiving an email electronic “blast” or message every time a loan is funded. We want you to see where your money is being invested! If you miss the “blast” you can go on our website and see our blog posted online. 

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, family or partners and as always, contact us directly with any questions.

Sincerely,
Rubicon Mortgage Fund, LLC