The EB-5 Immigrant Investor Program is a popular avenue for prospective immigrants seeking to begin new lives in the United States. For most immigrants, gaining U.S. citizenship through the EB-5 program begins with choosing a regional center to work with. The regional center role is to structure EB-5 investment opportunities that immigrants can fund in exchange for the immigration benefits. Here are some questions to consider that may help you select a reputable regional center to work with:
What Is an EB-5 Regional Center?
EB-5 regional centers manage and facilitate EB-5 investments with approval from the United States Citizenship and Immigration Services (USCIS) organization. Once a regional center has been approved for a particular region by USCIS, it may sponsor future projects within that specific area. The geographical coverage of a regional center can range from a handful of counties to an entire state. Most regional center function as financing intermediaries, middlemen, and profit off EB-5 fundraising. Often, regional centers will pay their investors small interest rates and will then loan pooled EB-5 capital at higher rates to projects/developers. The regional centers net the spread on interest rates, adding a significant amount of risk to projects in the form of sunk financing costs.
Other regional centers function as vertically-integrated regional centers and developers. In this model, they typically only profit on the back end as a developer and pass on the lower cost financing that EB-5 affords to the project, the EB-5 investors, and lastly to the developer themselves. This model can lead to safer structure for projects and less expensive EB-5 capital.
Why Choose a Regional Center Sponsor?
Working with a regional center isn’t a requirement for the EB-5 visa program. A committed investor can personally research, find, and invest in EB-5 projects independently. This process, also known as the standalone-direct program, can often take a significant amount of time, money, and effort to undertake. The main difference between the regional center vs. the standalone-direct routes is that the investors must directly hire and sustain 10 full-time W-2 employees. The regional center route allows for the counting of indirect and induced jobs created through construction expenditures alongside direct job creation. Typically, the indirect/induced job creation is quite significant, and projects can offer EB-5 investors job-creation cushions/buffers that are 3-4x the number of jobs that are required.
The ability to save time, resources, and energy in addition to having higher chances of immigration success due to the larger job creation is why 95% of EB-5 investors select the regional center path.
How Experienced Are the Regional Center Operators?
When deciding on a regional center project to invest in, consider how much experience the managers have and what the regional center’s track record is. A good start is finding out how long the center has been in operation. Ask the regional center how many projects they have sponsored and how many they have completed. It’s also worth asking how much of the EB-5 capital raised has been repaid to the investors in addition to I-526E and I-829 approval statistics. Lastly, one should ask at what rate is the EB-5 capital being charged to the project at? Then, subtract the interest rate they’re paying EB-5 investors, and finally multiply that interest rate by the total EB-5 capital raise. This will give you roughly how much the regional center is earning off interest for just one year. Keep in mind that most EB-5 projects last 5-7 years, so one can see very quickly how much profit regional centers make and the level of risk they can add to projects.
This is why Houston EB5 decided to be different at our inception. We are a vertically-integrated regional center and developer, so we only choose to profit off the underlying real-estate project on the back-end as opposed to profiting off EB-5 fundraising.
Due to our different business model over the last decade, we’ve proudly held a 100% project approval rate on I-526 and I-829 petitions as well as 100% capital repayment rates.
What are the EB-5 Investment Thresholds?
To gain permanent resident status through EB-5 programs, applicants must fund projects with a certain investment value. The base investment threshold is $1.05 million, but that can be reduced with certain qualifiers. Investments made in rural areas, or areas labeled as high-unemployment targeted employment areas (TEAs) qualify for a reduced $800,000 investment minimum. This makes rural and TEA investment projects highly desirable. Furthermore, rural projects give investors priority processing and the highest allocation of set aside visas.
Which Regional Center Should I Choose?
One of the first decisions immigrants must make about their process is what project to invest in. Some applicants select projects close to where they’ll be living in the US to facilitate travel to and from their project sites to inspect the progress. Other factors such as experience and success rates can be helpful in choosing the right regional center for you. Lastly, investors should choose a regional center based on whose interest they feel is best aligned with theirs. At the end of the day, profits can be the most motivating factor. Would investors position themselves more wisely by partnering with a regional center that can only be successful after the EB-5 investors have success (vertically-integrated developer model)? Or should investors choose to partner with a regional center that’ll profit every year whether the EB-5 investors have success, and quite to the contrary make projects significantly riskier due to the high cost of EB-5 capital?
At Houston EB5, we pride ourselves on being a company for immigrants that is run by immigrants. We understand the challenges that come with immigration and do our best to make your process easy to understand and navigate. Unlike other EB-5 regional centers, we also take on the role of principal owner on all investment projects. This makes us a partner, rather than a middleman when it comes to your investment decision. By sharing ownership of projects with our investors, we assume an equal risk and show our commitment to successfully developing projects.
