Redwood Mortgage Investors IX

What they do

The company was formed in October 2008 to act as a mortgage lender and investor, funding loans secured by California real estate, preferably income-producing properties in the San Francisco Bay Area and coastal Southern California. It has no employees; Redwood Mortgage Corp. (RMC) manages the business, arranges and generally services the loans, and provides personnel and services. As of December 31, 2025 the portfolio held 30 first trust deeds ($49.8M principal) and 6 second trust deeds ($8.4M principal). The company is taxed as a partnership, with federal and state income taxes the obligation of members.

Revenue drivers

• First trust deed loans — Largest holding: 30 loans with $49.8M principal at year-end 2025, versus 27 loans and $46.9M a year earlier; weighted average original loan-to-value was 55.5% (2024: 59.3%).
• Second trust deed loans — Smaller, higher-yield position: 6 loans with $8.4M principal at year-end 2025, versus 9 loans and $6.5M a year earlier; weighted average OLTV was 57.0% (2024: 55.9%).
• Portfolio interest income — Interest income from loans was $5.0M in 2025 versus $6.8M in 2024; the 2025 portfolio interest rate was 10.1%. Loan sales to unaffiliated third parties and line-of-credit advances are other funding sources.

Recent performance

Annual revenue declined from $6.5M in 2021 to $5.1M in 2025, with net income falling from $4.8M in 2021 to $1.8M in 2025 and operating cash flow also dropping to $1.8M in 2025. Quarterly revenue was $1.1M in 2025-09-30, $1.9M in 2025-12-31, $1.4M in 2026-03-31 and $1.3M in 2026-06-30. At June 30, 2026, total assets were $60.0M, total liabilities $2.0M, and cash and equivalents $5.8M. Loan principal outstanding fell to $53.3M at mid-2026 from $58.2M at year-end 2025, while the allowance for credit losses was $580 thousand. The balance sheet at mid-2026 included a $1.9M line of credit drawn and debt issuance costs of $57 thousand.

Strategy

The company's stated primary objectives are to yield a favorable return from making and investing in loans, preserve capital through loans secured by California real estate, and generate cash flow for distribution. Ongoing funding comes from loan payoffs, borrowers' monthly principal and interest payments, line-of-credit advances, loan sales to unaffiliated third parties, and payments from RMC on the formation loan. Cash available for distribution each month is allocated 99% to members and 1% to the manager, less amounts reserved or allocated for organization and offering expense reimbursements to RMC. Results depend on loan origination volume, capital available to lend, negotiated interest rates, line-of-credit terms, and the timing of formation-loan payments from RMC.

Risks

• California real estate concentration — Loans are secured by California real estate, and the allowance for credit losses assumes substantial protective equity remains sufficient if economic or real estate conditions in California deteriorate.
• Reliance on the external manager — RMI IX has no employees and RMC alone manages the business, arranges and generally services the loans, and can bind the company, so operational continuity depends on RMC.
• Declining earnings and cash flow — Revenue, net income and operating cash flow have fallen each year from 2021 through 2025, with net income and operating cash flow both at $1.8M in 2025 versus $4.8M and $5.8M in 2021.
• Credit loss estimation and collateral valuation — The allowance for credit losses under ASC 326 relies on estimates of collateral fair value, loan-to-value and forward-looking economic scenarios, and actual results could differ significantly.

Outlook

The filings state that net income, cash available for distribution and the net-distribution rate fluctuate with loan origination volume, available capital, interest rates negotiated with borrowers, line-of-credit advances and repayments, loan sales, fees and cost reimbursements to RMC, professional-service expenses, formation-loan payments and any waived fees. Management identifies key performance indicators including members' capital balances, redemptions, secured loan principal balances, and first and second trust deed counts and OLTVs. No specific forward financial guidance is provided in the excerpts.