Understanding the importance of funding strategies and key challenges faced by EB-5 Investors
Identifying the right EB-5 funding strategy can be the key difference between a confident and informed EB-5 investment decision and an application marred by delays and uncertainties .
By Vivek Tandon
A n EB-5 investment will likely rank as one of the most significant financial decisions in the investor ’ s life . Apart from the size of the investment —$ 800,000 — the decision can potentially transform the lives of not just the applicant but also his or her immediate family members .
Identifying the right funding strategy for an EB-5 investment may often get eclipsed by seemingly more vital decisions like project selection , Source of Funds analysis , or even finalizing funding to get the EB-5 process rolling .
However , comparing different funding strategies is a highly significant part of the process that can impact tactical and strategic aspects of the EB-5 application decision .
Challenges Unique to EB-5 ; ROI is Not Key
An EB-5 investment decision may differ from a conventional investment decision in that the investor ’ s primary objective may go beyond , or even completely exclude , the requirement of generating attractive returns on the investment . Yet , the EB-5 decision has an opportunity cost , and the right funding strategy is essential to minimize it and ensure the decision to apply for the EB-5 visa remains a value proposition for the investor .
Apart from facilitating an objective assessment of the pros and cons of the
The EB-5 decision has an opportunity cost , and the right funding strategy is essential to minimize it decision of the EB-5 investment decision , comparing different funding strategies can help the investor make an informed choice based on a thorough understanding of subjective factors unique to the investor ’ s personal and financial situation .
Along with tackling the confluence of multiple objective and subjective factors , identifying the right strategy is further complicated because its success or failure is a forward-looking exercise that , although impacted by it , may operate independently of the success of the EB-5 investment decision .
Challenges Unique To EB- 5 , Mainly the Risk of Loss of Investment
The choice and suitability of the funding strategy are also impacted by the investor ’ s risk tolerance , especially the possibility of not recovering the EB-5 investment .
Again , this requires careful analysis of existing factors along with judicious and conservative assessment of future risks . One must consider the best and worst-case scenarios to balance the opportunity cost and various potential risks of the EB-5 decision and make an informed choice .
The Conundrum Simplified — Sell or Loan
The investment strategy conundrum can
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