Evaluating EB-5 Regional Centers: Where Should I Invest My Money?

Working with an EB-5 Regional Center is, in most cases, safer than a direct investment in a new business enterprise. This article will go over the process of finding the right Regional Center for your financial situation.

In order to apply for an EB-5 visa, you must invest either $500,000 or $1,000,000 in a U.S.-based financial enterprise. To do so, roughly 95% of EB-5 applicants invest with EB-5 Regional Centers, which connect visa applicants to qualifying business projects. By investing with a Regional Center, you can mitigate some of your investment’s risk, making it more likely that you’ll qualify for an EB-5 visa.

Working with an EB-5 Regional Center is, in most cases, safer than a direct investment in a new business enterprise. However, not all Regional Centers are created equal. This article will go over the process of finding the right Regional Center for your financial situation. We’ll also talk briefly about evaluating EB-5 projects, as well as potential signs to watch out for.

As always, it’s important to treat investment opportunities with due caution and diligence. Always consult with both an immigration lawyer and an independent financial adviser before applying for an EB-5 visa.

Why Invest with a Regional Center?

In most cases, investing with an EB-5 Regional Center is the easiest and safest way to fulfill the EB-5 visas requirements. There are several reasons for this.

Indirect Job Creation

Normally, an EB-5 investor must personally create ten full-time positions at their enterprise. They also have to maintain those positions for two or more years. Unfortunately, this can result in a glut of expensive positions that your company can’t afford to maintain.

The situation is different for investors working with Regional Centers. The United States Citizenship and Immigration Services (USCIS) permits these investors to count jobs created collaterally from their investment’s impact on the local community towards their EB-5 quota. This includes

So why do you want to be able to count indirect jobs towards your EB-5 requirement? The main reason is that you don’t have to personally employ workers to fill those positions.

This will allow you to operate more easily under a budget, increasing the viability of your project.

Pooled Resources

The other big advantage to investing with an EB-5 Regional Center is that your project can benefit from the Regional Center’s resources and expertise. Think about it this way: Regional Centers want their investors to succeed. That’s because investor success is the primary metric by which Regional Centers are measured.

Limited Partnership

USCIS requires all EB-5 applicants to actively manage their financial venture. However, many EB-5 applicants are interested in retirement, would prefer to travel, or simply feel uncomfortable committing to full-time management. For those individuals, investing with an EB-5 Regional Center offers a more attractive option.

Most Regional Centers set their investors up as limited partners in their projects. As a limited partner, you’ll have responsibilities and powers sufficient to fill USCIS’s active management requirement. You’ll also be kept appraised of project developments and will be able to create or vote on new policy. However, your actual day-to-day work with the company will be minimized.

This will free up your personal schedule for other employment, travel, or simply enjoying your time in the United States.

What to Look for in an EB-5 Regional Center

Once you’ve chosen the Regional Center-based visa path, you’ll need to choose which specific Center to invest with. This will depend on a combination of the Center’s previous work, as well as personal preferences and convenience. However, keep in mind that personal evaluation is no substitute for the due diligence of a financial advisor.

Trustworthy Regional Centers will generally be forthcoming with all of the information listed below. If you contact a Regional Center and they refuse to share information with you, that should be a red flag. Instead, try to narrow your search to companies who are open with the details of their operations and their current projects.

USCIS Approval

Before you do anything else, check to make sure the Center you are interested in has been approved by the USCIS. The best way to verify this is by requesting a copy of the Center’s designation letter, as well as its most recent I-924A receipt.

Under no circumstances should you invest with a Regional Center that has not been approved by the USCIS. Similarly, you should avoid investing with Regional Centers that are still awaiting their USCIS approval. Doing so could jeopardize your EB-5 application, especially if the Center encounters difficulties during the validation process.

Previous Success

For most investors, the main factor in choosing an EB-5 Regional Center is the history of that Center’s projects. In particular, make sure that the prospective Center doesn’t have a history of I-526 or I-829 denials. While a small number of successful petitions isn’t necessarily a deal-breaker, a history of denials typically points to larger structural problems within the company.

You’ll also want to look into the return on investment for the Center’s previous projects. Each investor will have a different comfort level as far as ROI is concerned. However, it’s important to remember that EB-5 projects with Regional Centers rarely result in huge dividends for their investors. Occasional low or even negative returns are to be expected, even for highly rated, reliable Regional Centers.

Operator Experience

If your access to a Regional Center’s financial history is limited,  you’ll want to do some research on the owners or operators of the Center. Don’t be afraid to ask for biographies or resumes, as necessary.

The ideal Regional Center owner doesn’t necessarily need to have experience owning an investment firm. However, at the very least, he or she should have experience in international business. Legal knowledge is also a nice perk. The main thing to watch out for is a history of failed or questionable ventures, which should be red flags for any potential investors.

Waiting Lists

All Regional Centers have a limited number of projects they can take on at once. Thus, good Regional Centers tend to have extensive waiting lists for new investors. While few Regional Centers publish their expected wait times online, most will give an estimated waiting time to inquiring investors.

The length of this waiting period can be interpreted several ways. On the one hand, longer wait times tend to equate to better investment opportunities. On the other, the EB-5 process already takes a minimum of almost three years, and the waiting list might extend this process – and its expenses – out even further.

Another thing to consider is that your I-526 processing time will depend on your country of origin. In particular, individuals from high-volume countries (such as China) may end up waiting an additional two or more years just for the USCIS to process their petitions. Thus, Chinese investors who wish to immigrate quickly may be better off applying with a Regional Center with a shorter waiting period.

Ultimately, it’s up to you to decide if waiting for a great Regional Center is the correct decision.

Project Systems

Each EB-5 Regional Center will handle investor projects in a slightly different way. So, it’s important to figure out how your enterprise will be treated before you apply.

A few things to think about before you invest include:

  • Clarifying the exact financial and legal situation of your project with both the Regional Center and your lawyer.
  • Making sure that you understand your exact responsibilities and duties to the project, as well as the benefits you should expect.
  • Carefully reviewing all the documents the Regional Center gives you to insure consistency with your business plan.
  • Making sure you discuss any discrepancies in-depth and consider investing elsewhere if the Regional Center’s answers prove unsatisfactory.

Red Flags to Avoid

In general, you’ll want to look for an approved Regional Center headed by reliable, experienced staff. However, the EB-5 investor market tends to move quickly and some businesses can be left struggling behind. It can sometimes be hard to find a Regional Center that perfectly matches your criteria.

For that reason, it’s important to look out for red flags. These are qualities that indicate that a Regional Center is a poor investment choice. In the worst cases, they might even indicate that the Regional Center is not obeying the rules set down by USCIS.

Even beyond losing money, investing with such a Regional Center could place your entire application in jeopardy.

Lack of Transparency

As it stands right now, it can be tough to find information on Regional Centers. Some provide only vague or limited information on their websites, and USCIS rarely shares the information it has with investors. Thus, transparency is of paramount importance.

If the Regional Centers you contact refuse to provide you with reasonable access to information, it may be time to cross them off the list.

Legal Inexperience

The vast majority of EB-5 Regional Centers rely on outside teams of lawyers to handle the legal aspects of their business. Unfortunately, many Regional Centers end up hiring inexperienced legal teams that aren’t up to the complex task of structuring an EB-5 project. For that reason, it’s important to do your due diligence on the Regional Center’s legal team before investing.

Evaluating an EB-5 Investment Project

Once you’ve made a decision regarding which Regional Center to invest with, you still need to look over the actual EB-5 investment projects in that center. Even the best Regional Centers can make mistakes in structuring a project. Thus, you should always get an independent financial advisor or investment broker to scrutinize the business plan and associated documentation before you commit.

It’s hard to speak generally about what to look for in an EB-5 Project, because each one is so different. However, there are a few general things to look for.

Project Experience

Once again, it’s important to make sure that the people you are working with have developed similar projects in the past. At the very least, projects working in uncharted territory should hire outside experts to advise on topics in which they lack knowledge. This is particularly true of legal issues, which always have the potential to tank your EB-5 application, in addition to causing problems with the project.

Public Money

Many Regional Centers work with local governments to create projects that benefit the community. This requires extensive documentation, all of which should be easily available to you as an investor. Furthermore, this documentation has to be checked by local officials.

From an investor’s perspective, the result is a near guarantee that every aspect of the project is legitimate and in-line with the law.

Conclusion

Ultimately, the most important part of investing with an EB-5 Regional Center is doing your research before you invest. This should involve consulting with independent experts, especially financial advisors and investment brokers.

Additionally, you should never go into a visa-related deal without experienced legal counsel to back you up. Always talk to an immigration attorney before taking the monetary risk of pursing an EB-5 investor visa.

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