Who should invest?

As is the case with every investment, the return and risk factor should be assessed carefully. EB-5 investors must approach the EB-5 with the same approach. We have seen investors from all walks of life: professionals, business people, parents who want to facilitate their children’s education, and retirees.

One of the most important benefits of the EB-5 and the Regional Center is its ability to allow passive investments. A passive investor will not actively manage the business, thus the investor is free to live anywhere in the U.S. and pursue other areas with the same benefits of a Permanent Residency Status.

What is an accredited investor? And do I need to be an accredited investor to apply to the EB-5 program?

There are two definitions that must be met by potential EB-5 investors:

  • A person who has individual net worth, or joint net worth with a spouse, that exceeds US$ 1,000,000 at the time of the purchase.
  • A person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for the two most recent years and a reasonable expectation of the same income level in the current year.

Anyone currently residing in the U.S., regardless of their immigrant status, must be declared an accredited investor to be able to participate in the EB-5 program.

How are your EB-5 entities structures ?

M&D Regional Center has organized a newly-created enterprise, in which EB-5 investors will become equity shareholders and will be granted the rights of limited partners pursuant to the Uniform Limited Partnership Act. M&D Regional Center will undertake the day-to-day management decisions.

What is a limited liability company?

The best explanation is through the overview of the various entities:

A Corporation, formed by filing a charter with a state government, is owned by shareholders. The corporation is taxed on its income. The shareholders are taxed on dividends paid to them by the corporation. Shareholders do not pay tax on the corporation’s income. Shareholders only risk the cost of their investment in the corporation; they bear no responsibility for the general affairs of the corporation.

A partnership is comprised of two or more people or entities coming together for an enterprise, without any particular state charter. The partnership does not pay taxes, but passes all items of income and loss to the partners. The partners pay tax on partnership earnings. Each partner, unlike a corporate shareholder, undertakes responsibility for the entire operations of the partnership. If the partnership were to be sued and judged liable, each partner bears full responsibility for the damages. A corporate shareholder has no such direct liability.

A limited partnership combines corporate limited liability with partnership taxation. A limited partnership, formed by filing a charter with a state government, consists of a general partner and one or more limited partners. The charter details the rights and powers of the limited and general partners, percentages of ownership, and distributions of profits. The general partner manages the business. As in a corporation, the limited partners are passive investors liable only for the value of their investment. As in a general partnership, limited partnership income is taxed at the partner level, not at the entity level.

A limited liability company is a corporation that passes income and loss to the shareholders but offers shareholders the same limited liability as a limited partner or corporate shareholder. You could say a limited liability company is a corporate version of a limited partnership.

M&D Regional Center employs the limited liability company structure, in which immigrant investors will make their qualifying EB-5 investment for a share of the equity of such entity.

Is my investment guaranteed?

No, USCIS requires the investment to be ‘at risk’ to be able qualify as a legitimate investment in the EB-5 program. If any guarantee of return of any capital is given, it negates the ‘at risk’ requirement of the EB-5 guidelines and the investor’s petition will be denied. Therefore, redemption agreements are strictly prohibited and the entire capital must be at risk.

What are my risks?

As it is the case with any investment, there are several risks relating to the EB-5 program as well as project specific risks. All of the risk factors are outlined in detail in the offering documents and few general factors have been listed below.

Risk of denial in the EB-5 Program
The investment must be at-risk to qualify for the EB-5 Program. As part of the Form I-526 Petition, an immigrant investor must show evidence that he or she has placed the required amount of capital at risk for the purpose of generating a return on the capital placed at risk.

As part of the Form I-526 Petition, an immigrant investor must present to the USCIS clear documented evidence of the source of funds invested and that the funds belong to said immigrant investor. Generally, this source of funds requirement can be satisfied by submitting documents showing that the immigrant investor has a level of income from legal sources that would yield sufficient funds for the investment. The USCIS generally requires copies of income tax returns to satisfy the source of funds requirement. For immigrant investors who do not have such records, there may be other records that can be provided by an immigrant investor to demonstrate that the investment funds came from legal sources. All such matters regarding the immigrant investor’s petition should be discussed with immigration counsel.

Risks of Real Estate Investment Generally
Any commercial real estate developments are subject to numerous inherent risks and the investor must evaluate these risks carefully. Risk factors can vary significantly and some risk factors are out of control to anyone involved in the development. They can range from the adverse use of neighboring real estate, changes in federal, state, or local regulations, changes in local demographic or economic conditions, to the performance of the management and the developers, or natural disasters.

What exit strategies will be used to provide liquidity to the investors?

For a real estate development of this magnitude, the investors can begin to see the partial returns on their investment in the 3-5 year horizon. The actual strategy will be chosen based on numerous factors and will produce the highest risk adjust returns to its investors.

Where are the invested funds held before I get my conditional green card?

Our current procedure is for EB-5 investors to deposit funds in the escrow account, where they will be held until the Form I-526 Petition is approved or denied by the USCIS. If it is approved, the deposited funds will be invested in the EB-5 program and if it is denied, the deposited funds are returned to the investor.

Do I need a U.S. immigration lawyer to process my EB-5 petition?

In the U.S., an experienced immigration attorney is very important to anyone trying to receive a green card and the EB-5 program is no exception. An experienced EB-5 immigration attorney will guide the investor through the complex process of getting a conditional green card, permanent green card, then ultimately a citizenship. Regional Center will provide the supporting documents for the investor’s application to the USCIS, and the investor must work with the attorney to proceed with the immigration process. In addition, the investors are responsible for the legal fees and costs associated with the attorney.

Can my spouse and children also get their own U.S. Green Cards?

Investors and their immediate family members, such as a spouse or children under the age of 21, can apply for a visa and residency status. Therefore, when the investor’s Form I-526 Petition is approved, the investor’s immediate family will receive their own individual visa and residency status.

What is the most common issue for applying under the EB-5?

The most common issue for investors applying for the EB-5 has been the source of funds documentation. USCIS examines the source of the investment funds being used by the investor for EB-5 projects and will want to see that the funds come from a well-documented, legitimate source.

An experienced attorney will work with the investor to put together a comprehensive Form I-526 Petition.

If my Form I-526 Petition is denied by the USCIS, will I receive my deposit back?

Yes, if the investor’s Form I-526 petition has been denied, the funds deposited will be return to the investor.

What is Conditional Permanent Residency?

The first major hurdle is the approval of the Form I-526 Petition. Once that is approved, the investor is scheduled for an interview and a visa, and a conditional Permanent Residency status is given to the investor and the investor’s immediate family.

Conditional Permanent Residency is a full residency status that expires in two years. CPR individuals have all the rights of U.S. citizens (i.e.: employment and legal rights) with the exception of voting in general elections.

In order to remove the two-year condition, the investor can submit a Form I-829 Petition before the expiration. Form I-829 Petition is a job-creation evaluation of the project that received the investment funds from the investor. Working together with Regional Center, an attorney will prepare a Form I-829 Petition that provides evidence that ten jobs were created. Once the Form I-829 is approved, the condition will be removed and the investor is granted Permanent Residency Status.

What if I am already in the U.S. on another visa status?

Investors may file a Form I-526 Petition whether they live abroad or they are already living in U.S. under a different visa status. I-526 Petition process remains the same.

If I get a Conditional residency status, do I have to live in the U.S.?

Yes, conditional or permanent residency in the U.S. is granted with the intention that the applicant intends to immigrate to the U.S. and maintain as their primary residence a home in the United States.

Can I travel during EB-5 process?

Once an investor is granted a conditional or permanent residency status, the investor and any family members with the same residency status can travel freely for less than six months at a time outside of the United States.

If a such an individual needs to be outside of the U.S. for more than six months, he/she may apply (up to three times) for a travel permit that is good for two years. This travel permit establishes that the resident is not abandoning U.S. residency, despite the extended absence. However, time spent outside of U.S. is counted against the thirty-month physical presence requirement for citizenship.

What makes EB-5 visa different from the E-2 or L-1 visa?

Non-immigrant visas such as E-2 or L-1 only allow the person and the person’s family for a limited amount of time with stringent conditions. Therefore, these visa holders can face problems such as and not limited to:

  • The business they bought is not delivering sufficient turnover or employing sufficient staff for visa renewal to be successful.
  • The owner of the business is not well enough to continue operating the business.
  • The owner of the business wants to retire but cannot remain in the USA if they no longer maintain the business.
  • The owner’s children turn 21 and face deportation as they are no longer covered by the visa.
  • The owner did not really want to run a business, but was not advised of other options.

These visas are designed to be temporary and these visa holders cannot qualify for many rights and privileges of conditional or permanent residents. EB-5 is designed to establish permanent residency and a path to U.S. Citizenship.