RAC-1 Joint Venture Investment Program

Introduction – The Program 

Simply put, the RAC 1 Joint Venture Investment Program is a Real Estate investment opportunity. We structure the program, so it is easy for our clients to understand and requires little to no time on their part. Lets face it, investing in Real Estate takes a tremendous amount of time, energy, and, most importantly, money. With our RAC 1 Joint Venture Investment Program, we strive to simplify real estate investments, so that you can relax and live your life with the ease of mind that your investments are safe with us.

The Process/Requirements 

rac1-complete-serviceRAC Development has been in the distressed property acquisition business for the past 6 years, building money-making portfolios and invaluable knowledge of the market. Simply put, we purchase properties at the best deals possible; either through the trustee auction, REO’s, short sales, or the standard market. This is where you come in. After we acquire a property, you (the investor) have the option to invest in that property (project). The project will be open until it is filled up with investor funds. If the project does not fill, RAC will ‘pick up’ the remaining amount. We will then rehabilitate the property and put it out on the market for listing. Once the property is sold, we close the project and split the profit amongst our investors.

*Investing Requirements:

  • Minimum $10K investments 
  • Joint Venture Agreement 
  • Land Trust Agreement 

The Reason 

DSC_0722As we have covered earlier, a traditional real estate investment project generally involves lots of work, time, and money. That made this field of investment not as accessible to many potential investors out there such as newly college graduates who might not have enough saving for taking on a full real estate investment project or many of the working classes who just might not have the time for the workload involved with a project. The $10,000 minimum investment amount and the fact that RAC Development will be handling all the necessary work needed for a project (as well as all the expenses needed) makes this project much more accessible!

RAC-1’s Steps of Payout

RAC-1’s payout procedure is one of the aspects of this investment that RAC Development really shines.

After the sale of a project, clients will get their payout as following:

  1.     Principle
  2.     5% APR from the date the investors deposits the funds with us (even if the money not yet invested in a specific property)
  3.     Expenses RAC fronted will be recovered from the remaining profit
  4.     With the remaining net-profit, 50% will be split amongst the investors based on percentage

Reason why this payout sequence is so important is because it drastically lowers the risks involved in the investment.

For example, if we purchased a property for 300k and sells it for 330k, it would look as if we had a 30k margin on the property.

What if the expenses were 40k? Then it would mean that we lost money on the project right? And that’s where the benefits of our payout sequence come in:

RAC will first return the total principle of 300k back to investors at the close of escrow, which will leave 30k on the table.

Out of the 30k, RAC will then pay out the 5% APR to all of the investors, which let’s just say is about 5k hypothetically.

There will then be only 25k left on the table even though RAC needs to recuperate 40k worth of expenses. In which case RAC will take the loss on the expenses. So in this case, the investors will be able to keep their principle as well as gain the 5% APR on their investment while the company takes a loss.

In another word, this assures our investors that the company is motivated to sell the property for as much margin as possible to avoid losing money on our end.

RAC-1 Joint Venture vs Stock

Real Estate investment and stock investment has always been 2 of the most popular and common investments. Generally people have regarded stock investment to be much more risky than real estate. One is a just a piece of paper, and potentially put you in the negative over night, vs a real property that has lots of alternatives for you to make money.

However, the big drawback for investing in real estate rather than stocks is that it usually requires minimum of 6 digits investment capitals as oppose to stocks which can be invested with a much smaller amount.

RAC-1 combines the easy accessibility of stock investment with the stability of real estate investment.

RAC-1 Joint Venture vs Mutual Funds

RAC-1 Joint Venture does also share similarities with mutual funds investment in their stability; however, when you invest in mutual funds, your options are very limited. Although you can specify your investment strategies, you can’t exactly choose to invest in… let’s say Apple, or Samsung etc. You also have a limited knowledge of how your funds are dispersed.

With RAC-1 Joint Venture Program, investors choose what project they want to invest in. If the investors are not interested in any projects that are currently being offered, they have the option to just leave the investment capital with RAC and collect the 5% APR until RAC offers a property of their liking (in which these investors with existing funds in RAC will also get priority in being notified about the property’s availability)

Moreover, every project will be deeded under a new RAC Development Investment Land Trust rather than just “RAC Development Inc”. This allows us to incorporate all the investors of that specific project into the trust as beneficiary of the trust, which insures all investors’ ownership to the property. In another word, these investors can go to the county records and discover that they have a percentage ownership to the property.

RAC-1 Joint Venture vs Banks

As we have explained, RAC Development gives a preferred 5% APR to investors for the amount of time the investors depositing the funds with us (whether their funds are being invested in a property or not), which is much higher than the interest from most of the banks’ CD. So even if the investors aren’t interested in any of the current offered projects, they can still just wait with the funds in our queue pool while collecting an interest much higher than what most banks can offer.

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