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Practical concerns and frequently
Can EB-5 funds be used to purchase real estate?
Yes and no. USCIS clarified4 that it is not prohibited to use
EB-5 funds to acquire real estate; however, it is not generally
reasonable to treat EB-5 funds spent on real estate acquisition as
inputs to an employment econometric impact model.
The Matter of Izummi holds that the “full amount of money
must be made available to the business(es) most closely responsible
for creating the employment upon which the petition is based.”
For example, a job-creating enterprise may allocate some
EB-5 funds to purchasing land, and other EB-5 funds to
developing and operating a business on the purchased land.
The jobs created by this enterprise can be apportioned among
all the EB-5 investors. Such apportionment should be detailed
in the business plan.
Investors cannot obtain permanent residence by passive
investments such as simply purchasing real estate in the United
States, because the investment capital must be placed “at risk”
and the capital must be used to create jobs.
Should I be concerned about tenant occupancy?
Real estate projects have grown in complexity in terms of job
creation and capital stack. Tenant occupancy issues have been
a key concern for mix-used, renovation, and newly built real
estate projects. In a recently issued RFE, USCIS requires the
project to prove that “the construction project will be attracting
a tenant from within the region who was not able to operate
prior to the commercial construction project or attracting
new tenants from another geographical region.” The following
evidence should be provided to show that the tenant jobs are
“new” jobs, rather than “merely re