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One of the most important decisions when participating in the EB-5 Immigrant Investor Program, the United States golden visa equivalent, is choosing a suitable project for your investment. In this blog post, we will cover various factors that will help you in evaluating projects.

Prospective investors interested in the EB-5 program must commit a minimum of $800,000 to a government pre-approved real estate project that meets the program’s requirements. With this investment, investors and their family members (spouse and children under 21) can obtain U.S. Green Cards and thereby freely live and work in the United States. Even though the investment must remain “at risk,” and there is no guaranteed return of capital, there are ways for investors to mitigate the risk of losing their funds. Therefore, careful examination of various aspects of an EB-5 project is crucial prior to making any investment decision.

Before proceeding, the prospective investor must ensure that the chosen EB-5 project aligns with the requirements set by the United States Citizenship and Immigration Services (USCIS), the U.S. government agency that administers the EB-5 program. USCIS has designated specific organizations, known as regional centers, to present investment opportunities and facilitate the funding of EB-5 projects. You can learn more about regional centers by reading our previous blog here. Given the numerous project options available for investors, thorough due diligence is essential in selecting a suitable project. Selecting a suitable project is essential as an unsuitable choice can result in both financial losses and can negatively impact the investor’s overall migration goals.

Developer Track Record

To understand the various factors that an investor must examine in choosing a suitable project, it is important to understand the typical structure of an EB-5 regional center investment. EB-5 investors are limited partners that invest their capital contribution of $800,000 into a partnership, otherwise referred to as a new commercial enterprise (NCE). The NCE loans funds to the project company, otherwise referred to as a job creating entity (JCE). The JCE owns and develops the project. Stated simply, the regional center oversees the loan of the investors’ funds to the project for development. Given this structure with the EB-5 investment being given as a loan for the purpose of project development, the history of loan repayment of the project developer must be examined by prospective investors. If the project developer has a good track record and history of loan repayment, the chances that EB-5 investors will receive their investment funds back are higher. Additionally, if the developer has a history of foreclosures, this should be a redflag to EB-5 investors as it is a sign of additional risk. It is essential for prospective EB-5 investors to ask questions about the developer’s history such as the number of successful project completions, history of foreclosures, and whether they have a strong balance sheet.

Job Creation

Job creation is a crucial aspect of the EB-5 program. The EB-5 program mandates that each investor must create or maintain a minimum of ten full-time jobs for U.S. persons with their EB-5 investment. The project is given a two-year timeframe to meet and uphold this requirement and failure to do so could pose immigration risks for the investor. Prospective investors are advised to assess a project’s business plan to determine whether the project can indeed create and maintain the necessary jobs. As USCIS considers both direct and indirect jobs generated by the project, prospective investors must thoroughly comprehend how the regional center intends to utilize both direct and indirect job creation methods to fulfill the USCIS requirement. You can read more about job creation in our blog here.

Capital Stack

In addition to the above, prospective EB-5 investors must also look into the capital stack of a project. The capital stack of the project refers to the composition of the investment funds used for construction of the project. A solid capital stack is one in which all three forms of financing – sponsor equity, construction loan, and EB-5 capital – are involved. You can read more about a suitable capital stack for a project in our blog here.

Transparency

Another crucial factor that prospective investors must take into account for their peace of mind when considering an EB-5 project is transparency of the regional center and the project. To ensure transparency, an EB-5 investor may inquire whether the project site is equipped with cameras, allowing them to monitor the construction progress firsthand. As some projects do not offer onsite cameras, investors can request to visit the project site. If the regional center is unwilling to accommodate an investor in visiting the project site, this may be a negative indicator of the project’s suitability. Additionally, it is essential for the investor to determine if the regional center offers regular construction reports. These reports enable the investor to track whether the project is adhering to the agreed-upon timelines. If financial information is not openly shared or updates are not provided promptly, it could raise concerns for potential investors.

Our Role

Working with seasoned EB-5 advisors can help simplify your EB-5 process and raise your chances of a successful application. Our team of U.S. licensed lawyers and professionals have over a decade of experience in the EB-5 industry. We have assisted numerous individuals and families in successfully applying for U.S. residency through the EB-5 program over the years. Our team will provide you with multiple project options for your EB-5 application and we will guide you in selecting the most suitable project for your needs. If you are prepared to embark on your migration journey, reach out to us today for further details and information.