THE BASICS OF EB-5
Practical Steps for Investors in
Traditional & Emerging Markets
Considering Regional Center
Versus Direct EB-5 Investments
What considerations should potential investors take into account
when it comes to selecting the route for their EB-5 investments.
By Aaron Goforth, Phuong Le and Osvaldo Torres
W
e probably all know someone who’s gone through
the headaches of selecting an EB-5 project. If
you’re an overseas investor who’s interested in the
EB-5 program, you begin your thoughtful due diligence
process, wade through stacks of glossy marketing
brochures for multimillion-dollar condo developments,
4-star hotels or bridges. Some projects seem appealing,
while others not as much.
However, there are various issues that might begin to
eat at you, namely, most EB-5 projects give what you
consider a marginal return and you also might not like
the idea of giving up control to someone else.
At some point in the process,
you might consider creating an
investment through your own
direct or regional center EB-5
project.
Is this a good idea? The answer
is:
DIRECT OR REGIONAL CENTER EB-5?
Practical Issues to Consider for Direct EB-5
and Regional Center as Risk Mitigation
If you are wondering whether you should you invest in
your own project, you should pursue this option only
if you’re willing to invest much more than the current
minimum investment amount of $500,000. Understand
that minimum wage laws may eat up a third or more
of your start-up capital, there are tedious document
keeping requirements, and compliance with federal
immigration (I-9, E-Verify), local employment, labor and
employment benefits laws.
Higher Total Investment
Although it may be tempting to
consider going the direct EB-5
route, it’s worth considering that
the risk calculus concerns more
than maximizing your return
on investment (ROI). If you’re
using the direct EB-5 model,
there are hidden back end costs
to consider that may doom both the project and the
intended job creation.
"...it may be
tempting to consider
going the direct
EB-5 route..."
“Maybe.”
Below, are some considerations an investor should
consider before taking the plunge. There are pros and
cons if an investor considers using the direct or regional
center route. There are also advantages of hiring an
experienced team of professionals and their roles in
structuring the project with the purpose of creating a
deal that meets both immigration and investment goals.
You may have higher ROI, yes, but your total investment
will be far greater than $500,000. After all, in addition to
putting up the initial investment, you will be responsible
for securing the rest of the capital to operate the
business as well.
This is magnified when you consider things from a
small business and employment perspective. Investors
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