How to Select the Best EB-5 Projects to Invest In

The EB-5 Immigrant Investor Program is one of the most direct pathways to obtaining a green card in the United States. Through this initiative, the American government aims to stimulate economic growth by encouraging foreign investments. Foreign investors, on the other hand, benefit by obtaining Green Cards for themselves and their immediate family members (spouse and unmarried children under 21 years of age.)

After deciding to take the EB-5 route to obtain permanent residence in the U.S., the next crucial step is to select a feasible investment project, considering your financial capital and other resources.

This post will take you through the different investment options available to potential investors and how to select the best EB-5 projects to invest in.

 

Direct Investments vs. Regional Center Investments

EB-5 investors have two major investment options, each with unique requirements. This section will explain the nuances between the two options, highlighting their pros and cons and the category of investors they are best suited for.

Direct Investments

For this type of investment, investors are legally required to directly invest capital of at least $1,050,000 in a business, formally known as a New Commercial Enterprise (NCE). However, when the project is located in one of a targeted employment area (TEA), the investment threshold is decreased to $800,000. Additionally, the investment should directly result in the creation of 10 full-time jobs, each lasting for at least two years.

The most attractive characteristic of these EB-5 projects is control: the investor operates independently and is directly involved with the project’s development. In most cases, they also stand to gain high returns on investments because of the high risk/high reward principle in investment.

It is important to note that the law does not allow multiple individuals to pool funds to raise capital for this type of project. Therefore, only one person is expected to provide the stipulated minimum investment threshold. Also, direct investments are high-risk, as their success solely depends on the investor’s ability to manage their enterprise.

In other words, the direct investment model is best suited for investors who desire complete control of their investments but have a solid plan to recruit at least 10 people for two years and $800,000 to put away for investment purposes.

Regional Center Investments

These EB-5 projects are sponsored by regional centers, which are essentially economic entities assigned by the United States Citizenship and Immigration Services (USCIS) to facilitate EB-5 project investments. Unlike the direct investment plan, investments through regional centers allow multiple investors to pool resources to fund a single project. Real estate development projects are the most common project type in this category.

While the minimum investment thresholds are the same, regional center-sponsored investment projects are generally safer for immigration purposes.

Furthermore, the regional center handles most of the complicated paperwork, and the job creation requirements for regional center EB-5 projects are less stringent. That is, the 10 full-time jobs could be direct, indirect, or induced, if said jobs have a positive economic impact on the community.

On the downside, investors have little to no control over their investments, making this option best suited for investors who prefer to maintain a passive presence in the day-to-day management of the project.

How to Select the Best EB-5 Project

There is no one-size-fits-all approach to selecting EB-5 projects. Instead, investors need to do a holistic assessment of their circumstances, identify their available resources, and clearly define the immigration plans and investment goals they aim to achieve.

Below, we have provided four distinct factors potential investors must consider to ensure they are well-informed when deciding on an EB-5 project.

Risk Assessment

As with any other investment, the EB-5 program comes with varying levels of risks, depending on the investment project being considered, making risk assessment a core aspect of the EB-5 project selection process. The main objective here is to be aware of the type and level of risk you are taking on and to be sure you are comfortable taking such risk.

To do this, investors must first consider the economic climate of their project location. Data on the demand rate for your enterprise’s offerings can be used to assess risk levels and provide valuable insight into the project’s prospects.

Along with market data, potential investors need to apply due diligence when choosing a project developer. EB-5 investors should look out for experienced developers who have a track record of executing successful EB-5 projects while mitigating losses. It is also important that the developers are financially stable enough to support the project if needed and transparent about every step of the process.

Foreign nationals who choose to invest through regional center sponsors must ensure that the regional center is reputable with a successful track record.

Financial Viability

In analyzing the financial viability of EB-5 projects, it is crucial to identify which should be prioritized: return on investments or securing permanent residency in the U.S., the latter typically being the most important factor. That being said, most investors aim to balance the two objectives rather than forfeit one benefit for the other.

EB5 investors must operate with a sound business plan that aligns with their investment goals and immigration plans. Such an investment structure should include details such as total capital raised and total estimated project cost, potential revenue streams and expenditures, feasible strategies for ensuring good returns on investment, and a well-outlined exit strategy.

An analysis of the above information, alongside reliable data on risk assessment, allows potential investors to decide whether a project is best suited for them.

Legal Compliance

After satisfying the job creation requirements and minimum investment threshold provisions, investors are still expected to adhere to other general compliance laws.

USCIS requires investors to tender legal proof that their investment funds were obtained legitimately. Documentation, such as financial and tax statements or business ownership records, is needed. Furthermore, investors must only invest in New Commercial Enterprises (NCEs) where there is a risk of loss.

Investors must adhere to immigration compliance laws on the visa application process, ensuring complete documents are submitted on time. Lastly, investors must verify that their investments align with the U.S. securities laws since EB-5 investments can be classified as securities.

Professional Guidance

Given the complexities of investing in an EB-5 project, this might be the most essential step in selecting a project to invest in. Consulting an immigration lawyer specializing in EB-5 project investments provides investors with expert guidance, helping them avoid costly mistakes that may jeopardize their immigration process.

It is also advisable to contract a financial advisor who can provide professional oversight on the project’s capital structure and design viable ROI and exit strategies for the business. A competent financial advisor can also evaluate the job creation estimates and the overall sustainability of your proposed project business plan.

Finally, due diligence requires that investors confirm any data or information provided by regional centers and project developers, especially regarding their level of expertise and industry success. In most cases, investors consult third-party specialists who ensure their interests are guarded from a professional standpoint.

Select the Best EB-5 Project with EB5AN

Choosing an EB-5 investment project is very relative to the investor’s unique situation. Therefore, potential investors will benefit from a multifaceted assessment of a proposed project’s risk and financial viability, adherence to necessary regulations, and professional assistance.

EB5AN has helped more than 2,300 families from 60 countries relocate to the United States as lawful permanent residents. Our expert team has more than a decade of experience, and offers clients first-rate, low-risk EB-5 regional center projects with 100% USCIS project approval rate to date.

Start your EB-5 journey today by scheduling a free consultation with our team to get expert guidance on your investment options.