There is still a significant amount of confusion regarding the EB-5 immigration program and funds available for real estate projects. The program's rules are unique and seem to change frequently. To put it simply, the program allows foreign investors to make small equity commitments in a real estate project (from $500,000-1,000,000). The qualifying investment amount depends upon where the project is located and how many jobs the project needs to create. Foreign investors receive visas in exchange for the creation of new jobs. Some project managers see immigrant investors as an easy way to augment funding for a project because the foreign investors are more interested in obtaining the visa in exchange for their investment than they are about receiving huge returns on their investment. The problem is that while it seems like an easy solution to a project lacking funding; using this type of investment for a project is nowhere near easy.
- Be Sure the Project Qualifies - There are two qualifying methods, direct investment or a "regional center" investment. For the regional center investment to be an option, the project needs to be in an area that the U.S. Citizenship and Immigration Services have categorized as a high unemployment area.
- Assemble a Good Team - EB-5 investments are complicated deals. It's vital to the success of the project that you work with professionals. Contact an experienced attorney in order to ensure that nothing is missed and the project goes forward as scheduled.
- Be Cautious: Avoid "Finders" - EB-5 financing has increased in popularity. In response, "finders" have been popping up willing to market regional center projects and discover foreign/immigrant investors willing to invest in the project. Finders will expect a fee; which is in violation of U.S. Securities and Exchange Commission broker-dealer rules unless the finder is based outside the of the country. This is the most frequently violated rule.
- Get Familiar with the Rules (China's Rules) - Some estimate that more than 80% of EB-5 investments come from China. This makes it vital for those looking for EB-5 investments to know the rules that relate to the program. Be familiar with Chinese immigration and investment regulations.
- Keep an Eye on the Money Trail - Documenting the money trail of your transaction from the country in which it originates through to the development project is one of the most important regulatory aspects of the EB-5 process.
For additional information on how to incorporate EB-5 Program funds into your development project, get in touch with the experts at the Law Office of Retz & Aldover LLP.