The EB-5 investor visa program provides foreign investors and their families a pathway to permanent U.S. residency. To qualify for the EB-5 visa, foreign investors must invest at least $500,000 or $1 million in a new commercial enterprise that creates at least 10 full-time jobs for U.S. workers. With the minimum investment threshold being quite high, it is crucial for EB-5 investors to choose the right project that aligns with their goals and risk appetite. When evaluating EB-5 projects, investors should look at the regional center’s track record, the project’s job creation methodology, the credibility of the project principals, and the project’s exit strategy. Conducting thorough due diligence and seeking help from reputed EB-5 consultants can help investors make informed decisions. This article provides key factors EB-5 investors should consider when selecting projects to better ensure obtaining permanent green cards.
Examining the regional center’s past projects and success rate
Regional centers serve as intermediaries between investors and project developers to streamline the EB-5 process. Investors should examine the regional center’s track record in getting prior projects completed and helping investors obtain green cards. A regional center with a high approval rate for past projects instills confidence. Checking how many investors previously obtained permanent residency provides validation. Investors should be wary of brand new regional centers without a proven track record.
Understanding the project’s job creation methodology
Creating at least 10 full-time positions per EB-5 investor is mandatory for green card eligibility. Investors should ensure the job creation methodology is sound. Economists have to demonstrate reasonable job creation estimates in EB-5 business plans. Job creation models relying on multipliers tend to be riskier versus projects creating direct jobs. Real estate projects creating construction jobs have more certainty than “hypothetical” jobs. Investors should obtain help understanding job creation models to evaluate the level of risk.
Vetting the project developers’ reputation and expertise
The credibility of the EB-5 project developer is crucial. Investors should research the track record of the project principals in completing projects successfully. Experienced developers with domain expertise who have executed projects in the past provide more comfort. If a project involves building a hotel or assisted living facility, the principal’s hospitality or senior housing expertise becomes vital. Investors should be wary of inexperienced developers making unrealistic claims without proper qualifications.
Evaluating the project’s exit strategy
EB-5 investors need an exit strategy to get their investment capital back after obtaining unconditional permanent residency. Many EB-5 projects promise to buy back investors’ stakes at the end of 5-7 years. Investors must evaluate the credibility of such repurchase guarantees and ensure sufficient safeguards are in place in case a buyback does not occur. Projects with collateral assets that can be sold provide stronger exit strategies. Weak exit plans put getting investment capital back at risk.
EB-5 investors must evaluate regional center reputation, job creation models, developer credibility, and exit plans when selecting projects. Conducting comprehensive due diligence and seeking guidance from experienced EB-5 consultants ensures investors make informed decisions to better achieve immigration goals.