In the current landscape of Direct EB-5 investments, there are three types preferred by foreign investors who are looking to immigrate to the United States. Bernard Rojano, Immigrant Investment Expert and Founder and Principal Consultant at Xecute EB-5 Business Plan Solutions, categorizes these common trends by providing a breakdown of what Direct EB-5 investors are choosing.
3 Types of Direct Investments
1) Friends and Family: Many investors have a friend or family member who owns a business in the U.S. These investors will choose to become a partner or maybe even the sole proprietor by making their investment and creating their own jobs through them.
2) Scalable Direct: This second type of direct investment is when a U.S. franchise and/or business that has multiple units allows EB-5 investors to participate in those multiple units. “They reach out to us to do the modeling and create the marketing materials, similar to work we’ve done with Houston EB5 in the past, like Moderno’s model for service locations where they aggregate 4 investors per facility.” Rojano says.
3) Pooled, Single-Purpose Investments: These projects are pooling multiple investors into one project, then deploying those funds to generate the jobs to satisfy the job creation requirements of multiple investors. An example of this type of investment could be a technology start-up.
Even though the “friends and family” category of direct investment has traditionally been the most popular, scalable direct investments are second and continue to rise. Similarly, pooled investments are also gaining steam, now being developed by Regional Centers.
“We are seeing more and more pooled investments and scalable direct investments being structured and offered,” Bernard Rojano says of both types. “We’ve had inquiries and are working on projects with the intention of not just one investor but many to pool the investment.”
As the Managing Director of Houston EB5 who also works with Xecute, Roberto Contreras IV has seen this new trend continue to emerge as well. “More investors are pooling multiple investments together where management of that business is also putting money in,” he says. “You must create a business that will grow to create more than enough jobs, not have a limited operation without enough money in it.”
The Biggest Concerns Right Now of Direct EB-5 Investors
With the Regional Center program still in limbo, there is uncertainty regarding the future of the EB-5 program. When searching for an optimistic answer as far as when the Regional Center program might return, Bernard Rojano answers, “No earlier than the second quarter of next year, but that’s a guess like everybody else.”
This leaves Direct EB-5 as the only option right now for investors looking to immigrate permanently to the United States.
The biggest concern investors have with Direct EB-5 investments is ensuring they pass the immigration requirements. The project must be within a Targeted Employment Area (TEA) and create a minimum number of 10 jobs per investor. There’s a lot of positive thinking on the part of developers and aggressive projections of what each business will create job-wise. Consider the question, “Is the industry itself one that requires lots of employees and creates lots of jobs?”
“When it’s an industry where it doesn’t and there’s a push to create jobs when they’re not needed, that’s a recipe for disaster,” Rojano says. “It needs to be an industry that creates lots of jobs. Manufacturing, consumer services, going into people’s homes, servicing people’s businesses, warehousing – those types of things.”
There’s some due diligence in the fact the investment you’re making is going to create those jobs. It’s vital that you request up front, “Show me an example where these jobs have actually been created.”
The second biggest fear of investors is making sure they get their capital back and see a return on those funds. When you’re investing a large amount of money into a business through a Direct EB-5 investment, it’s easy to imagine your hard-earned capital being burnt up and disappearing into the abyss. From the view of the investor, it seems much more risky as opposed to the Regional Center model.
“With a Regional Center, there is a feeling of security that they’re buying a fixed asset with residual value, so if things go wrong, there is a process where they can get some of their capital back,” Bernard Rojano says. “When people look at Direct, they think their money is going to be used and there won’t be anything to get ahold of if something goes wrong.”
To help mitigate this common but understandable fear, Rojano recommends looking for a strong balance sheet with limited liabilities and good cash flow – which is hard to find when you’re dealing with a startup.
The last major fear investors have is a lack of control over the day-to-day operation of the business in which they’re investing (since they aren’t legally able to work in the U.S. yet). The wisest idea is judging the business by their history of successful ventures. “Make sure they have an operator with the discipline, knowledge and experience to run the business,” Rojano urges investors.
For the investors themselves who are putting their money up, they have to look at an investment they feel comfortable with, otherwise they can’t obtain a visa for both them and their families. “These are life-changing decisions for the investor,” Rojano openly states.
An immigrant himself who has realized the dream of living and working in the U.S., Bernard Rojano understands how easy it is to take for granted living in the best country in the world and remains sensitive to the personal feelings that go into the process of wanting to live here.
“We all have a lot of responsibility in trying to do the best work we can so they can reach their goal of residency,” Rojano says. “It’s very rewarding but can also be stressful for the investors.”
Why Moderno Porcelain Works Is Generating So Many Investments
As an immigration expert who often advises clients exploring Direct EB-5 that Moderno Porcelain Works might be right for them, Bernard Rojano cites multiples reasons, including how the owners and operators invest their own money right alongside you. “They are not unhurt if something goes wrong,” he says. “They have a lot of their own capital invested into growing this company.”
Another thing Moderno’s executive team has is discipline handling other people’s money. “It’s not a usual tool that a project or company will have,” Rojano comments based on personal experience in the industry. “They have immigration investment expertise and can address immigration investment requirements. The structure is beneficial to the investor.”
Last but certainly not least is Moderno’s decades of past experience in the surfacing industry. “They’re just plain good business people who have years of experience doing this,” Rojano says. “Even though it’s a young company, it’s not a young company when it comes to the management team running it.”
Determining Which Direct EB-5 Investment Is Right for You
With each new service location opened by Moderno Porcelain Works, around 60 jobs are created in a Targeted Employment Area (TEA). A total of 4 investors are pooled per location in order to surpass the minimum USCIS requirement of 10 U.S. jobs resulting from each investment. Moderno locations are already achieving enormous success in the following markets:
- Houston, TX
- Dallas, TX
- Central, TX (Austin and San Antonio)
- Miami, FL
- Orlando, FL
- Minneapolis, MN
- Los Angeles, CA
- San Diego, CA
- Denver, CO
- Atlanta, GA
Additionally, investment spots are currently being selected and finalized for the following U.S. cities:
- Albuquerque, NM
- Tampa Bay, FL
- Sacramento, CA
- Chicago, IL
Are you looking to immigrate to the United States through a safe and secure investment in a thriving business with a proven model of financial success? The team at Houston EB5 is committed to helping you find the option which best suits you and your family’s unique situation. Schedule a quick, no-obligation meeting with one of our Investor Relations Manager to evaluate your options on achieving the dream of immigrating to the U.S.
