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Q1 FY2019 USCIS Statistics for EB-5 Petition Processing

The USCIS has updated its EB-5 petition processing statistics, displayed on the Immigration and Citizenship Data page, to reflect information about the petitions received and processed duringthe first quarter of the 2019 financial year (October to December 2018).

The overall number of EB-5 forms processed by the Immigrant Investor Office (IPO) during this period decreased significantly, from 4,941 in FY2018 Q4 to 3,116 in FY2019 Q1. The number of I-924 applications processed decreased from 156 to only 69, with I-829 applications falling from 746 to 474 and I-526 applications decreasing from 4,039 to 2,573. This has been the IPO’s least productive quarter since FY2016 Q3, when it processed only 2,093 applications.

Of the 2,573 I-526 petitions processed, 398 petitions were denied and 2,175 were approved.Thus, the percentage of I-526 petitions approved decreased slightly, from around 87% in FY2018 Q4 to 85% in FY2019 Q1. Additionally, I-829 application approvals decreased from approximately 97% to 93.5%, and I-924 approvals from around 54% to 36%.

The number of I-829 and I-526 applications received increased compared to the previous quarter, at 797 compared to 467 for I-829 applications, and 1,808 compared to 1,338 for I-526 applications. The number of I-924 applications dropped from 31 to only 19, a surprisingly low number considering the 855 currently approved regional centers should file the I-924A annual report during Q4 to remain in good standing with USCIS. However, it is possible that all filings were not included in the data.

In relation to all types of employment-based petitions, those related to the EB-5 program constitute a small percentage. For example, in FY2019 Q1, USCIS received 388,338 Applications for Employment Authorization, compared to only 3,116 for all three categories related to the EB-5 program (I-526, I-829, and I-924).

A total of 21,775 petitions remain unprocessed, a number that consists of 13,508 I-526 applications, 8,119 I-829 applications, and 148 I-924 applications.Processing times for I-526 applications have increased slightly for FY2019 (up to January 31, 2019) compared to FY2018, at 20.4 months compared to 22.1 months, but processing times for I-829 petitions dropped from 27.1 months to 30.9 months for the same period.

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EB-5 Investment from Brazil

With a population of almost 212 million, Brazil now makes up the third-largest EB-5 market behind China and Vietnam, with the bonus of not yet having hit retrogression. Brazil’s interest in EB-5 visas can be attributed to the country’s recent economic downslide, its high crime and corruption rates, and its poor quality of education.

Wealth and Economy

Despite having the seventh-largest economy in the world only a decade ago, a recession in 2015-2016 shrank Brazil’s GDP by 8%, and the country is now facing high inflation and unemployment. Already 2,000 millionaires fled the country in 2017, continuing a trend seen over the last several years. Nevertheless, the number of Brazilian millionaires is expected to rise from the current 164,000 to 296,000 in 2022.

Political Landscape

Brazil has been rocked in recent years by major corruption scandals that even led to the impeachment of a former president. Bribery and fraud are commonplace in Brazil’s politics, tax management, and judicial system. The current president, Jair Bolsonaro, has authoritarian leanings and is an apologist for Brazil’s previous military regime. These factors provide a major incentive for wealthy Brazilians to leave the country.

Crime and Safety

Crime rates in Brazil have reached record highs, with a staggering 30.8 murders per 100,000 people in 2018. Organized crime, drug gang rivalries, and an under-resourced yet violent police force are all contributors. Fear of crime has dampened Brazil’s nightlife, with soldiers and tanks often appearing to keep the peace. Over 15,000 armored cars were sold in 2017 alone. A promise to curtail crime, loosen gun laws, and protect ordinary Brazilians was a large part of President Bolsonaro’s public appeal. A full 62% of young Brazilians surveyed said they would leave the country if they could, and many affluent Brazilians are trying to find a way out.

Environmental Conditions

One of the biggest environmental challenges for Brazil at the moment is deforestation. Brazil is home to the Amazon rainforest, the world’s largest tropical rainforest and a massive source of biodiversity and oxygen production. President Bolsonaro has already made moves to increase deforestation to facilitate higher agricultural production, worrying many environmental groups and activists. High pollution plagues large Brazilian cities such as São Paulo, and the country has a major crisis with waste management. On the other hand, the Brazilian government has been investing heavily in wind power for the last decade, and it is promoting international green building codes around the country.

Educational Quality

Brazilian schools have fallen far behind the recommended average in reading and math scores, exacerbating the current economic crisis. The country’s education system is troubled by inefficient spending, inadequate investment in teachers, and low-quality curricula. There are currently 2,600 public and private universities, and the government is making efforts to improve its vocational training. Nevertheless, many Brazilians are looking elsewhere for better academic opportunities for their offspring. There are already over 13,000 Brazilian students studying in the U.S., making it the tenth largest international student population in America.

EB-5 Project Selection Preferences

Brazilian EB-5 investors are keeping a watchful eye on the unstable political situation unfolding in their country. In order to protect their wealth before it is too late, many EB-5 investors in Brazil prefer to invest in projects that can produce quick results. Like other Latin Americans, Brazilian EB-5 investors lean towards working with regional centers and investing in smaller projects with physical results. However, with the time constraints posed by the current financial crisis in Brazil, the returns from Brazilian EB-5 investments are often secondary considerations.

Capital Flow and Other Challenges with the EB-5 Process

Because of Brazil’s strong trading ties with Florida, cities like Miami have become hotspots for Brazilian EB-5 investors interested in moving to the U.S. However, shifting money out of Brazil is costly and challenging, with bureaucratic banking known for its inefficiency. In addition, monthly transfers out of Brazil are limited to $10,000 BRL, or about $3,000 USD.

Marketing Channels for Investors

Brazil is the world’s fifth-largest country and providesa large source of potential EB-5 investors. However, the EB-5 market in Brazil is highly fragmented, with a nominal number of EB-5-specific immigration brokersfor investors to work with. As a result, most Brazilian EB-5 investors must go through smaller firms such as accountants, real estate brokers, travel agencies, and wealth managers. Many regional centers and project sponsors also hold workshops within Brazil to increase awareness of the EB-5 visa process, as well as targeting Brazilians already in the U.S. who are concerned about their immigration status in the current political climate.

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Immigrant Investors in the U.S.

EB-5 Capital Redeployment: Now what?

Despite some recent backlash against immigrants in America, the United States’ economic landscape has been transformed by immigrant investors in the last thirty years. A study by the National Foundation for American Policy in 2016 found that just over half of U.S. startups worth over $1 billion—including WhatsApp, Uber, and SpaceX—were founded by immigrants. These companies have created thousands of American jobs. With so much potential for success waiting in America, it can be very enticing for foreign entrepreneurs to make their home here. This is where the EB-5 visa comes in.

EB-5 Program Summary

The EB-5 Program was established by the Immigration Act of 1990 to boost the U.S. economy and job market with investment from foreign individuals. The program has been a success, with thousands of foreign investors legally migrating to the United States and creating hundreds of thousands of American jobs. However, some cases of fraud—including the recent high-profile misuse of investor funds in Vermont—have raised concerns, prompting some lawmakers to ask for the program’s discontinuation. Nevertheless, the EB-5 visa continues to be a popular option for immigrants and their families.

EB-5 Visa Requirements and Eligibility

To qualify for the EB-5 Program, a foreigner must invest at least $1 million in a U.S. commercial enterprise, or at least $500,000 in a business located in a rural or high-unemployment area (see Targeted Employment Area/TEA). Commercial enterprises can include local businesses, partnerships, business trusts, and corporations. It is important to note that qualifying enterprises must have been founded after 1990, or have been restructured or expanded significantly if they were established before then.

Another requirement for the EB-5 visa is that the foreigner’s investment must create ten or more full-time American jobs lasting at least two years. If investors contribute to an EB-5 project through a regional center, both direct and indirect job creation can count toward this total. On a related note, recent changes to the rules on capital infusion now allow for loans or borrowed funds to be injected into a business in addition to simple cash.

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Investors from China Experience EB-5 Changes as India Application Numbers Rise

EB-5 Capital Redeployment: Now what?

When it comes to top destinations for Indian migrants, the United States is now the second most popular choice, and with good reason. Statistically speaking, Indian citizens tend to be better educated than both native and foreign-born U.S. residents. Additionally, they often boast higher income levels. As a result, Indian citizens are strong candidates for employment-based green cards, skilled occupation-based H-1B visas, and the EB-5 program.

With significant backlogs existing for employment-based green cards, it’s no surprise that an increasing number of Indian citizens are now turning to EB-5 visas as a viable alternative. In fact, there is currently no backlog for fifth-preference (EB-5) visas for Indian citizens. These trends contrast sharply with China, where the EB-5 boom seems to be experiencing a decline.

Why Chinese Investors Are Abandoning the EB-5 Program in Droves

Once upon a time, Chinese migrants flocked to the EB-5 program, bringing with them significant wealth and job opportunities. In fact, almost $20 billion of foreign direct investment funds entered the United States between 2010 and 2015 alone, much of it from China. This trend was due in part to the country’s financial success—a wealthier populace meant that more people could afford the $500,000 investment required by the immigrant investor program. Additionally, Chinese citizens were drawn to Western culture and educational opportunities.

However, Chinese applications have slowed in recent years due to both 10-year visa backlogs and legislative uncertainty. Chinese candidates who do choose the EB-5 program tend to target larger real estate projects featuring loan models with set maturity dates. Most investors take on a passive role rather than participating in the day-to-day management of ventures. Since 2016, Chinese filings have dropped each year, with India now leading the pack in applications.

India’s History with the EB-5 Program

A product of the Immigration Act of 1990, the EB-5 visa program provides Indian migrants and investors from other nations with a path to lawful permanent residency in the United States. To meet EB-5 visa obligations, investors must put $1 million (or $500,000 in the case of a regional center) into an American business venture that creates a minimum of 10 full-time jobs over a period of two years. If you’re working with a regional center, both direct and indirect jobs count toward the final job creation numbers.

As was the case in China, investors from India were drawn to America because of cultural factors and educational opportunities. However, while Chinese investors aren’t primarily focused on investment returns, Indian candidates do expect to see financial gains on their projects. Many Indian investors instead opt for smaller entrepreneurial projects that feature a preferred equity model.

Still, Indian citizens have historically made up only a small percentage of EB-5 candidates. In fact, as late as 2015, Indian investors accounted for just over 1 percent of the program’s market. The same year, Chinese candidates made up more than 83 percent of the market. These numbers are particularly surprising in light of India’s large population and the country’s impressive economic growth in recent years.

India’s hesitation to jump on the EB-5 bandwagon may have something to do with the country’s history. In the past, Indian migrants likely targeted Great Britain because of the country’s colonial heritage. This trend was supported by the British Nationality Act of 1948, which dictated that citizens of former British colonies could opt to remain in the United Kingdom. While the Immigration Act of 1971 put an end to this policy, many Indians had already emigrated to England by this point.

In the second half of the 20th century, a changing American immigration landscape made it possible for Indian citizens to come to the United States. The Immigration and Nationality Act of 1965 eliminated country-based quotas, while the Immigration Act of 1990 allowed for new categories of employment-based visas. In fact, 70 percent of H-1B visas currently go to Indian citizens. Still, EB-5 numbers remained low among Indian migrants.

Understanding the Discrepancy Between Indian and Chinese EB-5 Applications

The discrepancy in the number of Chinese and Indian EB-5 applicants may have something to do with the countries’ varied macroeconomic environments. While China enjoyed large amounts of foreign direct investment funds, the country’s citizens have relatively little economic freedom compared to India. Moreover, the government often restricts access to private capital and plays a significant role in the marketplace. In fact, 90 percent of companies on the Shanghai and Shenzhen stock exchanges are owned by the state.

On the other hand, India allows a wider range of options for its domestic investors. More favorable financial conditions, combined with a distaste for foreign investment, have led many Indian investors to keep their money at home. Additionally, opportunities in India are better for individuals with high net worths. The fact that India rewards its entrepreneurs may help explain why EB-5 visas have not been a historically popular option on the subcontinent.

British immigration data supports the notion that Indians are more likely to invest at home. In fact, in 2016 Indians comprised 55 percent of all Tier 2 (Skilled Worker Visa) applicants. However, they weren’t a significant factor in Tier 1 (Investor Visa) numbers. From 2014 to 2017, the United Kingdom received 135 Tier 1 applications from China and just eight applications from India.

The Future of Indian EB-5 Candidates

Despite past trends, the number of Indian EB-5 candidates is on the rise. In fact, over the last year, regional centers have started targeting India’s largest cities and financial hubs with the goal of finding a new EB-5 market. Similarly, India’s economic prosperity and positive geopolitical reputation are driving its EB-5 participation.

Even as India’s EB-5 numbers are increasing, the country’s applicants approach the program in very different ways. Emigration patterns are different in India and China. While a majority of Chinese applicants live in China and seek visas at the consulate through registered migration agents, priorities are different for Indian investors. In fact in 2016 and 2017, nearly 50 percent of the Indians who applied to the EB-5 program were already U.S. visa holders. Most were students or H-1B holders.

Still, opportunities are shifting for Indian citizens, with the traditional immigration channels drying up in recent years. The fact that Indians dominate employer-sponsored visas like the EB-2 and EB-3 in the United States means that the backlog for approval is significant. Additionally, Indian migrants have to wait until they can find an employer who is ready and willing to take them on when they go this route.

Understanding what the Future Holds for EB-5 Investors in India and China

While the future currently looks bright for Indian EB-5 candidates, it’s worth noting that the legislature is seeking to raise minimum investment costs for applicants. Consequently, some prospective migrants may be priced out of pursuing traditional visas. Individuals who possess the funding may opt to put their money into domestic ventures or target Indian-dominated projects. As a result, regional centers may not find as many investors as they desire.

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State Department Releases New Visa Tallies by Country

EB-5 Capital Redeployment: Now what?

China has long been one of the top sources for EB-5 visa applications worldwide. While the number of Chinese candidates remained high in 2018, new reporting by the U.S. Department of State reveals a significant increase in EB-5 applicants from locales outside mainland China.

What the Research Says

Last year, the U.S. Department of State published a document titled Report of the Visa Office 2018. Within this data is a table showing a tally of conditional green cards issued last year for the employment-based fifth preference (EB-5) visa as divided by applicant country of origin. According to the report, the EB-5 industry saw significant increases in visas issued to applications not originating in mainland China.

Additionally, the State Department report reveals an increase in the number of countries from which applicants are originating. These changes are good news for EB-5 marketers, as they indicate a large degree of interest in the program worldwide. Moreover, the rise in non-Chinese applications represents a significant development for applicants born in China, as it could result in their own wait times shifting. For example, if EB-5 applicants come primarily from a few countries, the per country cap will result in a block that could shorten waits for Chinese-born investors. On the other hand, if applications span numerous countries, wait times for Chinese applicants could remain the same or even get worse.

A Look Back in Time

At the start of the 21st century, foreign interest in EB-5 visas was relatively small. It wasn’t until Chinese applications started to rise in the 2010s that overall visa numbers really skyrocketed. In 2014, investors hit the visa ceiling (about 10,000 per year), and EB-5 industry growth started to slow as a result. However, it’s worth noting that demand among Chinese-born applicants has yet to wane. On the contrary, the change in visa tallies just reflects an increasing interest on the part of other countries, while the Chinese backlog remains significant.

Understanding (and Misunderstanding) the Trends

While those in the EB-5 industry may be tempted to draw conclusions about investment opportunities based on the State Department report, it’s important to keep certain factors in mind when interpreting the data. One point worth considering is that the Visa Office tracks green cards issued. Understanding investor details means considering that the time between investment and visa issuance ranges from one to five years, with each investor receiving three visas on average.

Additionally, investors should note that the number of visas requested is not always the number distributed. In cases where a country exceeds the visa cap, applicants are requesting more visas than are available. After the cap for each nation has been reached, any extra visas will go to those who have been waiting in line the longest, regardless of country of origin. For example, in 2018, China was recorded as receiving 48% of available EB-5 visas because many of their candidates had been in line the longest. Vietnam received just 7% of visas even though many Vietnamese candidates had also applied that year.

Long processing times for I-526 forms can also affect visa tallies. In other words, the 2018 climb in Indian visa applications may reflect investment increases that happened one or even two years ago, rather than changes from the last year. The USCIS’ log of pending I-526 forms by country and priority date is a good source of information on demand trends in different nations.

What the Future Holds for the EB-5 Industry

An increasing number of investors are looking to India as a top source of EB-5 revenue in the coming years. In fact, research shows that India brought in nearly $500 million in EB-5 funds in 2018 alone. Experts predict that the subcontinent will be responsible for $1 billion in funds in 2019 and a shocking $2 billion in 2020.

Furthermore, many EB-5 investment specialists anticipated seeing a rise in the number of visas associated with direct investments. However, so far that prediction has not been borne out by the evidence. As of 2018, regional center investments comprised 94% of issued visas. The number of regional center investments accounted for 93% of visas in 2017 and 91% in 2016.

While the future of EB-5 investing looks bright, it’s worth noting that capitalizing on these opportunities means ensuring qualified applicants have access to visas. If investors from India are stuck waiting in long lines, the United States is unlikely to benefit from the aforementioned $3 billion in funding. To that end, the success of this program may depend in large part on whether or not Congress provides visa relief in the coming months and years.

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Harnessing India’s Potential in the EB-5 Market

EB-5 Capital Redeployment: Now what?

The EB-5 market is officially booming on the subcontinent. As of September 2018, India already had 284 EB-5 petitions in place compared to just 164 petitions coming from China. According to reports by the USCIS, the Indian EB-5 market is poised to explode, bringing in an estimated $3 billion by 2020.

Unfortunately, some people in the field believe that retrogression will put a halt to India’s booming EB-5 industry. Understanding how retrogression works is crucial if business leaders hope to maximize profits and take advantage of India’s vast potential in the coming years.

Understanding Retrogression

To understand retrogression, it’s crucial for investors to recognize that different countries have their own distinct entry gates for the EB-5 process. In other words, individuals stand in separate lines based on their application dates and whether they fall in the employment or family visa category. The length of a particular line depends on the visa category, with certain countries experiencing far longer wait times than others. For example, the line for British EB-5 candidates is relatively short at present compared to the line for candidates in China.

With retrogression, every country is allocated a certain number of visas. If visas remain after that, they are allotted to the oldest applications regardless of the individuals’ countries of origin. After the visa quota for a country with a long line has been met, individuals in that line are unlikely to attain immigration benefits. On the other hand, if a country’s retrogression time is less than the application processing time, applicants are unlikely to be affected by waits.

Taking Advantage of EB-5 Investment Opportunities

Retrogression can seem complex, but those who fail to understand this process may miss out on opportunities to earn significant sums in EB-5 revenue. In fact, misunderstanding retrogression will result in around $3 billion in losses, according to experts.

Because of the large number of EB-5 applications in India, some industry professionals believe that once retrogression begins, all Indians waiting for visas will be in line behind Chinese applicants. However, this isn’t the case.

On the contrary, Indian EB-5 candidates will not wind up behind Chinese applicants, who face a 15-year waiting period. Because each country has a visa line of its own, and the line for India is shorter, Indian candidates will move ahead of Chinese applicants who may have been waiting longer. Remember, there are around 10,000 EB-5 visas available per year, with each country receiving around 700 visas. Consequently, Indian applicants will never be forced to wait behind applicants from China or any other country, and vice versa.

Currently, China, India, and Vietnam are the only countries with more than 700 candidates waiting for EB-5s. When allocating visas, the industry gives numbers to the oldest 700 Chinese, Indian, and Vietnamese applications first, followed by those from other countries. Then the remaining visas are given to the oldest applications regardless of country, assuming there are any left. So if there are 1,000 extra visas to be allotted, they will go to the oldest Chinese applications due to the backlog there.

It’s worth noting that applicants won’t be impacted in cases when retrogression time is less than processing time. For example, applicants in India are unlikely to experience delays until there are 12 consecutive months of retrogressed times longer than processing times.

Indian EB-5 wait times contrast with those for EB-2 and EB-3 categories, which are currently 25 years and 75 years respectively. While it’s possible that EB-5 waits may expand to five or 10 years, the option will still be favorable for Indian citizens looking to emigrate.

Other categories also follow a system of retrogression, with different countries having separate gates and lines. For example, EB-3 candidates in India currently have a wait time of eight years, while the wait time in the Phillipines is just 1.5 years. This discrepancy occurs because there are far more Indians standing in the EB-3 line than there are Filipino nationals. It’s worth mentioning that both India and the Phillipines have been in retrogressed territory for several years, with neither country’s candidates standing behind the other’s.

What Investors Need to Know

Experts anticipate that the Indian EB-5 market will continue to grow in the coming years. In fact, the subcontinent represents more than 50% of the world’s total EB-5 market and is expected to grow at a rate of 100% per year. The good news is that retrogression should have little effect on flows of EB-5 capital from this area. Those in the EB-5 industry need to do their homework to avoid missing out on this $3-billion opportunity within the Indian market.

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EB-5 Changes – Are You Up to Date?

EB-5 Capital Redeployment: Now what?

Since 2015, the EB-5 industry has been in limbo in anticipation of new legislation and USCIS regulations that will revamp the EB-5 Immigrant Investor Program. These lingering proposed changes are still neither final nor agreed upon among government officials. While the government continues to drag its feet, those involved with the EB-5 program have witnessed its significant growth, with more than $20 billion in total investment since 2008 and more than 30,000 I-526 immigrant investor petitions filed with USCIS from 2015 to 2017. However, those who have been following developments closely can attest that this growing popularity has driven two notable changes to the day-to-day use of the EB-5 program.

1) Change in Investor Profile

At the 2018 IIUSA EB-5 Conference held in Washington, D.C., Charlie Oppenheim, chief of the Visa Control and Reporting Division for U.S. Department of State, announced that backlogs for Chinese and Vietnamese EB-5 investors will grow to 10 plus years and five plus years, respectively. While Vietnam remains a strong market for EB-5 investors, EB-5 players have taken to traveling to other countries, such as India, Brazil, South Korea, Mexico, South Africa, and others, to make up for the dramatic decrease in EB-5 investment funds coming from China.

There has also been a push within the United States to seek out foreign nationals who may be interested in the EB-5 program. For example, the ever-growing backlog for Indian nationals waiting to migrate under the EB-2 immigrant category for individuals with advanced degrees and the EB-3 immigrant category for skilled workers and professionals has spurred an increased interest in EB-5 for this demographic. With the exploration of new countries has come new terms for working with EB-5 investors. Unlike EB-5 dealings in China, which almost always involved working with a migration broker handling most of the interaction on behalf of the EB-5 investor, individuals from countries that are newer to the EB-5 space require much more one-on-one interaction and relationship building between the client, attorney, and EB-5 project. A potential client from India or Mexico will likely require that he or she personally meet attorneys and evaluate a number of EB-5 projects before making a decision.

2) Change in Investment Terms

The changing landscape in the EB-5 industry is also reflected within the investment documents offered by EB-5 projects. Interacting with new foreign nationals and the effects of extended EB-5 immigration timelines have led to the need for updated investment terms. In the past, because Chinese investors preferred the type of model in which the EB-5 fund loans pooled EB-5 investor funds to a project, this model made up most projects. However, as new countries are being targeted, another investment structure has become popular, which involves the EB-5 fund using pooled EB-5 investor funds to make an equity investment in a project. Consequently, EB-5 projects now offer both investment options to accommodate investors from around the world.

Furthermore, the EB-5 backlog and the related extended EB-5 immigration timeline for Chinese and Vietnamese investors must be discussed in the project investment documents. The longer backlogs for Chinese and Vietnamese investors requires revised language in the investment contracts regarding child age-out concerns and clarifications on timeframes for investors receiving credit for job creation. Aspects of how the EB-5 funds are handled by the project must also be incorporated into the contracts due to extended EB-5 timelines, such as anticipating longer EB-5 loan terms and describing options for redeployment of EB-5 investment funds.

Overall, these changes mean that the need to make connections, cultivate relationships, and think creatively is more important than ever before in EB-5. For those getting involved with an EB-5 project, be prepared to structure an immigration-compliant, competitive project that checks all the boxes under current EB-5 conditions.

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EB-5 Program 2018 Year in Review

For EB5AN, 2018 was an exciting year marked by milestones, accomplishment, and growth. Our partners collectively spent more than 200 days on the ground in foreign markets—including China, India, Brazil, Colombia, and Vietnam (along with many more)—getting a sense for where EB-5 is headed and how we can keep ahead of upcoming trends.

We have now sponsored more than 1,000 investors from more than 30 nations across our regional centers, and we continue to hold a 100% approval rate on all adjudicated USCIS petitions.

Additionally, we are proud of the recognition our company and its principals have received. We were recognized by Entrepreneur Magazine in its 2018 Entrepreneur 360 List, and Managing Members Sam Silverman and Mike Schoenfeld were recognized by Forbes Magazine.

As we enter 2019, we are excited about the opportunities ahead, and we look forward to offering our clients the highest caliber of EB-5 consulting services, Regional Center sponsorship, and document preparation. Our expanded team of specialists is able to quickly respond to client needs without sacrificing quality, and we look forward to all the new client relationships 2019 will bring.

Below, we’ll consider 2018 in light of visa issuance and petition adjudication, program reauthorization, policy updates, and industry trends. We’ve also appended a list of updates to regional centers.

Visa Issuance and Petition Adjudication

This year, the U.S. Department of State provided several key updates regarding visa issuance.

  • Estimated visa wait times for mainland-born Chinese nationals increased
  • A cut-off date was assigned to Vietnam
  • Near term backlogs for India, Brazil, and South Korea were predicted

Beyond these updates, the discussion surrounding EB-5 visa availability has become a mainstream topic, particularly as it relates to marketing projects and making investment decisions.

Currently available data shows a drop in total I-526 Petition filings in 2018, with the total by the end of Q3 standing at just 5,086. The total number by Q3 in 2017 was 10,528, and that fiscal year ended with 12,165 filings. Total adjudications for I-526 Petitions, however, increased: by Q3, 2018, approved and denied petitions totaled 11,083 compared to a total of 9,150 by Q3, 2017. Pending petitions dropped from 24,992 in 2017 to 17,126 by Q3 of 2018. This highlights an increase in processing ability and a decrease in new applications, indicating an anticipated faster timeline for adjudications.

I-829 Petitions rose in 2018, totaling 2,816 by Q3 as compared to 2,132 by Q3, 2017. Current data also reflects a rise in total I-829 adjudications. By Q3, 2018, approved and denied petitions totaled 1,968, while in Q3, 2017, adjudicated petitions totaled only 1,292 (though Q4, 2017, saw a surge in I-829 adjudications, more than doubling this total—we won’t know until new data is available how Q4, 2018, compared to the previous year).

Program Reauthorization

The EB-5 regional center program is subject to periodic reauthorization, which typically is accomplished within appropriations bills. This year, the regional center program required reauthorization five times:

  • January 19 – reauthorized on January 22 after government shutdown
  • February 8 – reauthorized
  • March 23 – reauthorized
  • September 30 – reauthorized
  • December 7 (amended to December 21) – reauthorized on January 25 through February 15 after extended government shutdown

The failure of Congress to facilitate a smooth appropriations process has resulted in a tumultuous year for the EB-5 Program and has created significant uncertainty for all EB-5 industry stakeholders.

We support legislative measures that would stabilize the EB-5 Program, particularly by either eliminating the need for regional center program reauthorization or by providing long-term authorization. Previous proposed legislation has included five-year regional center reauthorization, and the main industry groups are working to advance a bill that also includes a five-year reauthorization period. We support such efforts and hope that the appropriations drama that unfolded in 2018 does not repeat itself in 2019.

Policy Updates

Proposed regulations from 2017—which would have increased the minimum investment threshold for EB-5 investments, changed how targeted employment areas (TEAs) are certified, and more—were expected to receive a Final Rule by February 2018. The anticipated target date for the rule was then changed to November. To date, no Final Rule has been published. The public generally did not favor the draft rule, and the final details of the proposed regulations, if ever published, remain a mystery.

Despite not finalizing the proposed regulation, the Immigrant Investor Program Office (IPO) did issue four updates to the USCIS Policy Manual.

  • May 2 – Reaffirmation that USCIS does provide documentation of investors’ conditional lawful permanent resident (CLPR) status to those who have pending I-829 Petitions
  • May 15 – Rescission of prior guidance regarding tenant-occupancy methodology
  • August 24 – Updated guidance regarding regional center geographic coverage, requests to expand such coverage, and how such requests affect I-526 Petition filings
  • October 30 – Clarification concerning immigrant investors and debt arrangements

Industry Trends

This year, IPO hired a new chief, Sarah M. Kendall, held three stakeholder engagements (all in November), and issued four updates to the policy manual (as mentioned in greater detail above). As already mentioned, I-526 processing volume rose significantly and I-829 processing volume seems to have risen as well (depending on Q4 performance). The rise in petition adjudication times is welcomed, and we hope this trend continues into 2019.

The EB-5 industry in general is trending toward increased fragmentation. Investor origin is diversifying, and new investors are tending to seek out smaller, more niche regional center offerings. Investors are shifting away from larger regional centers and seem to be gravitating toward more personal opportunities in which relationship factors ultimately drive where investors are placing their capital.

Additionally, investors are growing more savvy and are being drawn to projects with reduced administrative fees, fewer intermediaries, and higher returns. Based on our information, preferred equity deals have absorbed a significant share of the market and now represent approximately half of EB-5 regional center project structures—mezzanine debt deals constituting the other half.

As we’ve observed these changes, we continue to offer clients a turnkey solution that remains flexible enough to meet fluctuations in the market. We work with our clients to find solutions that best meet their needs and are experienced at sponsoring and structuring both preferred equity and mezzanine debt deals. We see our time spent on the ground in foreign markets as an invaluable investment that has allowed us to stay on top of these trends.

For more information about how EB5AN can help you structure your project for EB-5, compile the necessary documents, affiliate with one of our regional centers, set up your own regional center, and more, please contact us at info@EB5AN.com.

Changes in Approved Regional Centers

The following regional centers were added to the approved regional center list from September 11 to December 31:

  • California – Los Angeles International Regional Center, LLC
  • California – Southern California EB-5 Fund, LLC
  • Connecticut / New Jersey / New York – York Resources RC Funding, LLC
  • Florida – BC Central Florida Regional Center LLC
  • Illinois / Indiana – Ameri-Link Midwest Regional Center
  • Nevada – Brilliant EB-5 Regional Center, LLC
  • Ohio – Ameri-Link Ohio Regional Center, LLC
  • Puerto Rico – Mayaguez Regional Center, LLC
  • South Carolina – FCA South Carolina Regional Center, LLC
  • Texas – American Equity Fund Texas, LLC
  • Texas – National EB-5 Wealth Center, LLC

The following regional centers were renamed:

  • California / Oregon / Washington – Smith Western Regional Center f/k/a Western Pacific Regional Center
  • Illinois, Indiana – Native American Regional Center, LLC, f/k/a Native American EB-5 Corporation

The following regional centers were terminated throughout the year:

  • Alabama
  • Civitas Alabama Regional Center (9/6/2018)
  • Encore Alabama/Florida Regional Center (4/3/2018)
  • Arizona
  • Central Arizona Regional Center (12/19/2018)
  • Arkansas
  • Ark of the Ozarks LLC (pending; 4/5/2018)
  • Liberty South Regional Center (1/19/2018)
  • California
  • Altura Regional Center, LLC (4/9/2018)
  • Amaxi Regional Center, LLC (5/1/2018)
  • AmerAsia EB5 Regional Center SF, LLC (6/7/2018)
  • American Altin Regional Center (8/8/2018)
  • American Dream Fund San Francisco Regional Center, LLC (10/3/2018)
  • American General Realty Advisors Regional Center (4/20/2018)
  • Build America Capital Partners Regional Center LLC (7/31/2018)
  • Build America Fund 1, LLC (8/9/2018)
  • Cal Pacific RC LLC (7/16/2018)
  • California Bond Finance Regional Center, LLC (4/12/2018)
  • California Global Alliance Regional Center c/o Lewis C. Nelson & Sons, Inc. (8/31/2018)
  • California International Regional Center LLC (7/10/2018)
  • California Investment Immigration Fund, LLC (CIIF) (3/20/2018)
  • California Pacific Regional Center, Inc (6/11/2018)
  • Central California Regional Center, LLC (4/13/2018)
  • Charter Square Regional Center, LLC (7/10/2018)
  • EB5 United West Regional Center, LLC (7/27/2018)
  • Encore S. CA RC, LLC (4/18/2018)
  • Faustus Capital LLC (5/24/2018)
  • Future Resources, Inc. (8/15/2018)
  • Global America Regional Center (4/27/2018)
  • Golden State Economic Development Fund, LLC (12/6/2018)
  • L Global Regional Center, LLC (8/20/2018)
  • Manchester Pacific Regional Center (3/28/2018)
  • New Energy Horizons Regional Center (4/12/2018)
  • QueensFort Capital California Regional Center, LLC (4/12/2018)
  • Regency Regional Center, LLC (3/15/2018)
  • Regional Economic Development & Investment Group (4/5/2018)
  • San Diego Regional Investment Center, LLC (11/16/2018)
  • SPG Regional Center, LLC (4/26/2018)
  • Colorado
  • ADC Colorado Regional Center, LLC (5/1/2018)
  • Colorado Growth Fund, LLC (5/15/2018)
  • Colorado Headwaters RC, LLC (5/24/2018)
  • Encore Colorado RC, LLC (9/24/2018)
  • Live in America – Colorado Regional Center LLC (9/7/2018)
  • Connecticut
  • High Stone Regional Center, LLC (4/9/2018)
  • District of Columbia
  • Civitas Washington D.C. Regional Center (9/5/2018)
  • EB5 Affiliate Network Washington, D.C. Regional Center, LLC (9/13/2018)
  • Encore Wash D.C. RC, LLC (5/25/2018)
  • TBC Washington DC Area Regional Center, LLC (4/6/2018)
  • Florida
  • BLMP Florida Healthcare Regional Center, LLC (3/30/2018)
  • Citizens Regional Center of Florida (8/24/2018)
  • Civitas Miami Regional Center, LLC (9/6/2018)
  • Cornerstone Regional Center, Inc. (4/6/2018)
  • Florida East Coast EB5 Regional Center LLC f/k/a United States Growth Fund, LLC (4/10/2018)
  • Greystone EB5 Southeast Regional Center LLC f/k/a Greystone Florida Regional Center LLC (4/13/2018)
  • Georgia
  • American YiYo Regional Center (4/12/2018)
  • Civitas Atlanta Regional Center (9/6/2018)
  • Diversified Global Investment, LLC (1/30/2018)
  • Hawaii
  • South Pacific Regional Center, LLC (3/29/2018)
  • Idaho
  • Idaho State Regional Center LLC (7/2/2018)
  • Illinois
  • American Pioneer Regional Center, LLC (3/27/2018)
  • Chicagoland Foreign Investment Group (CFIG) Regional Center (7/16/2018)
  • Civitas Illinois Regional Center (9/5/2018)
  • Indiana
  • Energize-ECI EB-5 Visa Regional Center (5/9/2018)
  • Invest Midwest Regional Center f/k/a Civitas Indiana Regional Center (8/21/2018)
  • SAA Cedisus EB-5 Projects – SW Indiana Regional Center, LLC (4/18/2018)
  • The Mid-American Regional Center, LLC (8/30/2018)
  • Iowa
  • Iowa Department of Economic Development (IDED) (4/19/2018)
  • Island of Guam

E Development Corporation dba EDC (10/15/2018)

  • Kansas
  • Southwest Kansas Regional Center (2/1/2018)
  • Kentucky
  • Midwest Regional Center, Inc. (4/5/2018)
  • Louisiana
  • Civitas Louisiana Regional Center (9/11/2018)
  • LIGTT Regional Center (pending; 4/18/2018)
  • New Orleans’ Mayor’s Office RC (2/27/2018)
  • Maine
  • New England Center for Business Development, LLC (5/9/2018)
  • Marianas Islands
  • Marianas EB5 Regional Center (5/29/2018)
  • Rota EB5 Regional Center (6/21/2018)
  • Saipan Regional Investment Center, LLC (8/1/2018)
  • Maryland
  • Maryland Area Regional Center, LLC (1/23/2018)
  • USA ODI Regional Center, LLC (3/20/2018)
  • Massachusetts
  • Americas Green Card Regional Center (7/12/2018)
  • Encore Boston RC, LLC (4/18/2018)
  • Queensfort Capital Massachusetts Regional Center, LLC (3/29/2018)
  • Michigan
  • Civitas Michigan Regional Center (9/6/2018)
  • Lansing Economic Development Corporation (LEDC) Regional Center (1/23/2018)
  • Michigan-Indiana EB-5 Regional Center (3/29/2018)
  • Mississippi
  • Gulf Coast Funds Management, LLC (8/30/2018)
  • Northern Mississippi Regional Center, LLC (9/7/2018)
  • Nebraska
  • White Lotus Group Regional Center (6/26/2018)
  • Nevada
  • Nevada Development Fund LLC (7/12/2018)
  • Silver State Regional Center LLC (4/11/2018)
  • New Jersey
  • East Coast Renewable Regional Center, LLC (4/9/2018)
  • G.R.E.E.N. Regional Center (4/2/2018)
  • North American Regional Center (8/2/2018)
  • New York
  • North Atlantic Regional Center, LLC (5/1/2018)
  • Queens Fort New York Regional Center, LLC (3/28/2018)
  • North Carolina
  • Carolina EB-5 RTP Regional Center, LLC (12/20/2018)
  • Encore Raleigh/Durham Regional Center (4/2/2018)
  • North Dakota
  • Landy Resources Management, LLC (5/1/2018)
  • Ohio
  • Mag Ventures 1, LLC (9/11/2018)
  • Northeast Ohio Regional Center (7/18/2018)
  • Ohio Lakeside Regional Investment Center (5/1/2018)
  • Oklahoma
  • 5 Starr Regional Center LLC (4/5/2018)
  • Chen Roberts Regional Center (3/9/2018)
  • Civitas Great Plains Regional Center (9/12/2018)
  • Oregon
  • American International Venture Fund – Oregon, LLC (4/9/2018)
  • APIC Regional Center, LLC (8/8/2018)
  • Pennsylvania
  • Encore Pennsylvania RC, LLC (EPRC) (8/20/2018)
  • Liberty EB5 Regional Center (5/1/2018)
  • Puerto Rico
  • Commonweaith of Puerto Rico Regional Center Corporation (4/25/2018)
  • Omega Puerto Rico Regional Center, LLC (2/15/2018)
  • Reside in America Puerto Rico, LLC (5/1/2018)
  • South Carolina
  • Southeastern Higher Education Regional Center (1/2/2018)
  • USHoldings Regional Center (9/24/2018)
  • South Dakota
  • South Dakota International Business Institute (SDIBI) (5/11/2018)
  • Tennessee
  • EB5 Memphis Regional Center, LLC (2/26/2018)
  • Texas
  • Central Texas Properties Regional Center (3/27/2018)
  • Central Texas Regional Center (8/21/2018)
  • Civitas Laredo Regional Center, LLC (9/6/2018)
  • Civitas Rio Grande Regional Center (9/10/2018)
  • Collegiate Regional Center LLC d/b/a Texas Collegiate Regional Center (pending; 5/15/2018)
  • Global Century (Houston) (4/12/2018)
  • Greater Houston Investment Center, LLC (1/26/2018)
  • Home Paradise Texas Regional Center, LLC (4/17/2018)
  • One World Development Fund, Inc. (4/12/2018)
  • QueensFort Capital Texas Regional Center, LLC (4/27/2018)
  • RGV EB-5 Regional Center (7/10/2018)
  • South Texas EB-5 Regional Center, LLC (3/27/2018)
  • US Freedom Capital-Texas, LLC (9/18/2018)
  • Utah
  • Utah Invest Regional Center, LLC (7/3/2018)
  • Vermont
  • Vermont Agency of Commerce and Community Development (7/3/2018)
  • Washington
  • American Bridge Seattle Regional Center, LLC (8/1/2018)
  • Encore Washington/Oregon Regional Center, LLC (4/18/2018)
  • Great Ocean Regional Center (7/30/2018)
  • Liongate Regional Center, LLC (4/27/2018)
  • Pacific Northwest Regional Center (4/5/2018)
  • Pacific Viniculture (3/22/2018)
  • Tacoma EB 5 Regional Center (5/2/2018)
  • Washington Foreign Investment Management Group, LLC (4/26/2018)
  • Washington State Regional Center (7/31/2018)
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Turkish Investors & the EB-5 Program

EB-5 Capital Redeployment: Now what?

Turkey is traditionally known as the bridge between Europe and Asia, and this is true – both geographically and economically. Today, the immigration and investment landscape in Turkey is a two-way street, as it remains an attractive destination for investors and tourists, and at the same time is among the countries experiencing high rates of “brain drain” due to outbound immigration. Recent political instability, the perception of a stricter government, and doubts about what the future holds for the next generation are among the negative factors driving a considerable portion of the population to explore opportunities to migrate and grow their families elsewhere. At the same time, opportunities for education, employment, and property acquisition abroad are key factors that attract Turks to seek alternative futures in other countries, with European countries being the traditionally and culturally preferred option.

Immigration Trends in Turkey

Similar to Middle Eastern investment immigration markets, many Turks view investment immigration not as a planned migration option but as an escape hatch to be accessed if the political environment worsens or Middle Eastern unrest significantly affects their daily lives. “Golden visa” programs in Portugal, Spain, Greece, and Malta have been particularly popular, as these programs do not require the immigrant investor to move and begin the residency upon approval. Another attractive path for outbound immigration has been through the 1973 Turkish European Community Association Agreement Visa, governed by the 1963 Ankara Agreement, which, among other rights, allows Turkish citizens to incorporate and run their own businesses and obtain residency permits in the United Kingdom. Given Turkish nationals’ unique immigration drivers, EB-5 visas and emigrating to the United States were foreign concepts to most of them, which is reflected in the small number of I-526 petitions filed by Turkish nationals in the years leading up to 2016.

Today’s millennial generation in Eastern Europe and the Middle East, however, grew up with strong American cultural influences and are more interested in sending their children to school or to pursue employment in the U.S. that the generations before. For Turks wanting to spend limited amounts of time in the United States, B-1/B-2 visitor visas remain an option, and the slow processing times for visa issuance following the October 2017 diplomatic dispute at the U.S. Embassy in Istanbul are resolving. H1-B, E-2, L-1, O-1, and other EB categories are also valid and widely used options, leaving EB-5—as it should be—as the option of last resort when all other avenues have been exhausted.

Turkish Investor Profile and Source of Funds

Looking for investments in Turkey is, in the world of EB-5, a newer market. There is no “typical” EB-5 investor anywhere in the world, and that is the case for Turkey as well. The Turkish investor is often very well educated (many having received their higher education in the United States, United Kingdom, or continental Europe), a white-collar professional, the owner of a small to mid-size business, or a graduate student from a wealthy family. Unlike India or China, Turkey has not experienced rapidly increasing real estate values and thus does not have a large “property millionaire” class. Nor does Turkey have outbound remittance restrictions to complicate the path of funds (although banks typically ask for a copy of the subscription agreement as proof of the underlying investment). And Turkey is not on the Treasury Department’s Office of Foreign Asset Control list of sanctioned countries, so escrow transactions are typically not an issue.

A common source-of-funds challenge for Turkish investors occurs when the investor uses funds from the sale of a long-held property, where title deed documents and tax records do not match the actual sales amount—an irregular practice that was endemic in Turkey until the last decade. Another recurring issue pertains to taxes. Turkey and the United States reached an agreement in 1996 to prevent double taxation, but wealthy Turks still prefer to shelter their Turkish assets from the U.S. tax system. It is therefore advisable at the outset to consult with a qualified overseas or inbound tax consultant, wealth manager, or law firm with a solid U.S.–Turkey tax practice to address such questions.

Conversion and Preference in Projects

The process of converting a prospective investor in Turkey to an actual investor is typically slow, and culturally it is not uncommon for a prospective investor to require many visits and due diligence calls, adding up to somewhere between two to six months to close. As is often the case with investors from India, the Middle East, and Europe, Turkish investors ask questions that are very technical and that require attention from the underwriting team of the regional center and/or the developer to explain the mechanics behind the offering documents.

Turkish investors are much more familiar with the coastal U.S. cities than the heartland; New York City, San Francisco, Los Angeles, and Miami are usually the preferred locations for both second home purchases and EB-5 investments. Typically, big developers or sponsors attract investors to review the offering, but they will not invest if they do not understand or approve of the deal structure, regardless of the stakeholders or location of the project. The investment returns are lower on the prospect’s list of EB-5 investment priorities, and secure deals (rather than returns) drive the decision-making process.

Referral Landscape

As there is often a natural transition from home purchase to investment immigration, real estate agencies have a relevant and captive client base, but they do not possess much expertise in emigration nor a thorough understanding of the transactional / or offering documents. Other popular investor referral sources are wealth managers, reputable law firms, and tax advisors, as high-net-worth individuals tend to have more confidence in dealing with such vetted groups. Likewise, many Turkish high-net-worth individuals can speak English, but it is a significant plus for them to be able to converse with sophisticated native Turkish speakers when conducting project due diligence or working through their source-of funds issues.

Given its population and motivating factors, Turkey certainly is an exciting market for EB-5, but successfully accessing it requires a serious investment of both time and resources. In the years to come—contingent upon potential legislative changes, of course—expect Turkey to rapidly climb the ranks of the top 10 EB-5 countries.

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EB-5 Capital Redeployment: Now what?

EB-5 Capital Redeployment: Now what?

Whether you are beginning the EB-5 investment process or have already been invested in an EB-5 project, it is a good idea to know the details of capital redeployment in terms of the EB-5 visa program. Capital redeployment may not be a common topic for EB-5 investors, but it is a topic worth understanding.

Due to overwhelming demand for EB-5 visas, the queue for I-829 petition processing has grown. To date, most annual applications for the EB-5 program originate from China. These increased demands from China have added to processing times for EB-5 investors.

Today, an EB-5 investor may find themselves in a situation where the need for capital redeployment becomes a reality due to the long wait times for I-829 petitioning. If this is the case, you should know what capital redeployment means for you, and why you may need to use it.

What is capital redeployment?

As an EB-5 investor, you allocate capital to a project, and that project uses your funds to execute the business plan of the project. While executing the project business plan, the job-creating enterprise (JCE) must also meet its job creation requirement numbers.

In many cases, it will take the JCE approximately four to five years to succeed in executing a business plan for the project and also meeting the job creation requirement it is held to. Once this is done, the project ends and the JCE returns the capital to the new commercial enterprise (NCE). The NCE receives the returned loan principal, and the project is considered finished.

The project can be accomplished ahead of schedule. If this happens, the original principal amount of the loan may need be redeployed into a new project. This may not be a decision you wish to make, but it may be necessary if your I-829 has not been processed yet.

Why you may need to redeploy funds

You may be wondering why funds would need to be redeployed if the project is completed early. The United States Citizenship and Immigration Service (USCIS) published a draft memo in 2015 on projects ending before I-829 approval has taken place. It stated that any funds returned by the JCE before the I-829 is processed would need to stay at risk.

The USCIS has disseminated little formal guidance on this subject, but these small pieces of information can be seen as reasons you should keep your funds at risk if a project is completed before the I-829 is approved.

While your money must stay at risk, there is no specified guidance on what type of risk this refers to.

Keeping your money at risk – Redeploy with JCE

To keep your money at risk, the NCE can loan the capital to the same JCE you worked with before. There are pros and cons to this strategy.
If you had a positive experience with your original JCE, you may find it a welcome advantage to be able to redeploy your capital with them. Since the JCE finished the project earlier than estimated, you may view the company as extremely efficient and welcome the opportunity to reinvest.

Be careful about this, as the new project you will redeploy your capital to may not have as favorable of a timeline. It is possible the new project executed by the JCE is a much more in-depth project with significant bottlenecks.

You should research the new project and do proper due diligence regarding project goals and challenges. Your money may be locked up longer than you wish if the project takes longer than your previous project.

You should also do your due diligence on the potential profitability of the project. Since your money is at risk, you need to do proper research to understand what the project is trying to accomplish, and how the potential cash flows and debt structuring of the project look from a risk perspective.

One positive aspect of redeploying the capital is that you will no longer be held to the job creation requirement you were held to before.

Other options

There have been opinions and interpretations of the USCIS views on “taking risk.” Some believe that taking risk can mean investing in other opportunities. If this is true, you may be able to invest in something outside of the JCE.

For example, you may be able to invest in an individual stock purchased through the stock market. This would be an investment at risk, so it could potentially fall into this category. Alternatively, potential investments could include real estate investment trusts (REITs), company stock and/or funds such as ETF’s and mutual funds, and even alternative investments.

You may decide for purposes of liquidity to invest in one of these areas instead of investing in a completely new project with a JCE. Investing in something like an individual stock is extremely liquid, as the stock could be sold immediately after the I-829 is secured. This can be significantly better than locking capital into a new project with a JCE.

Conclusion

While the USCIS hasn’t made any firm rules, it may be wise to keep your investment at risk in the event the project in which you invested is accomplished early. You may do this by investing in a new project with the same JCE. This could lock your capital up for a long time, and there are risks associated with redeployment. Some have interpreted the need for the money to stay at risk to have a broader scope, including through other investments such as stocks and real estate.

Whatever your decision in terms of redeployment, it is important to educate yourself about how redeployment can both help and hurt. As long as you do your due diligence, you may be able to use redeployment in your favor.

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