Why EB-5 Investors Gravitate Toward Regional Center Investments

There is no difference in the outcome of any successful EB-5 investment: Meet all program requirements, and both the investor and their eligible family members can secure permanent residency status in the United States. Some of the basic stipulations include investing a minimum capital amount, providing evidence of its lawful sources, and proving that 10 full-time jobs (or more) have been successfully created for U.S. workers.

EB-5 investments can only happen in one of two ways: either a foreign investor’s capital goes through a USCIS-approved regional center or it is infused directly into a program-approved project. Which path is better depends entirely on the investor and their personal and business goals. Both pathways have their merits. On one hand, investing directly is suitable for investors who wish to use their extensive management experience within the new commercial enterprise (NCE). In this way, they can retain more control over their invested funds. On the other hand, history has shown that most program participants find EB-5 investment through a regional center is far more advantageous than direct EB5 investment.

Four Advantages of Investing in an EB-5 Regional Center

Due to the higher level of security and greater freedom that investing in an EB-5 regional center has provided since the implementation of the EB-5 Regional Center Program, it has been the most popular option among EB5 investment participants. In fact, there are some years on the books in which the sum total of investors from certain countries opted for regional center investment. There are four specific contributing factors to this highly preferred investment route.

Access to Experienced EB-5 Professionals

Though the EB-5 program boasts one of the most direct paths to U.S. permanent residency, navigating the regulations for a successful investment can still be inherently complicated, full of challenges throughout the journey. Working with a reputable regional center offers direct access to industry experts with extensive experience in EB5 investment projects and solid relationships within the EB-5 community. Regional center investors can access professional guidance throughout the investment process, ensuring compliance with EB-5 regulations from start to finish.

Fewer Hands-On Management Responsibilities

EB-5 investment participants who choose to invest directly are heavily involved in the everyday management of the new commercial enterprise (NCE). This can be intimidating for investors without the curriculum vitae (or even just the desire) necessary to participate in this more hands-on way. Investors who wish to devote their time to other affairs are spared the extensive list of responsibilities that accompanies direct investment by working through regional centers. They usually opt to fulfill the requirement to be involved in the NCE as policy advisors and limited partners. Fewer hands-on responsibilities also mean more freedom when it comes to establishing a home base. An investor may, for example, choose to invest in a project in Florida but also live in Hawaii.

Greater Focus on TEA Projects

Targeted employment areas (TEAs) in the EB-5 program are geographical regions identified as either rural or having high unemployment rates. These areas stand to benefit most from the job creation and other economic stimulation EB-5 investments can bring. In consideration of these high-need areas, U.S. Congress enacted a powerful incentive that has successfully cultivated the demand for TEA investment among EB5 investment participants. The major incentive is the minimum investment requirement being cut in half. Instead of a required $1.8 million in capital funding, TEA investments only require a minimum of $900,000. And while it is possible to find a direct EB-5 investment project that qualifies for TEA status, working through a regional center makes the selection process easier. Most regional centers have chosen to focus on program-approved projects that qualify for TEA status, making it a highly desirable investment route.

Relaxed Requirements for Job Creation

Every EB-5 investment participant must prove that their capital has created a minimum of 10 full-time jobs for American workers that last more than two years to maintain eligibility for their permanent residency status in the U.S. The difference between direct investment and investing through a regional center, however, is that investors participating in a regional center project are allowed to count all direct, indirect, and induced jobs toward this eligibility requirement. Instead of having to submit an NCE payroll history to prove job creation, these EB5 investment participants only need to supply a professionally developed economic impact report that includes an estimate of the jobs that were created by the NCE’s goods and services as well as wages NCE employees have spent locally.

Of course, not all EB-5 regional centers are the same. There are considerations to make to select the right EB-5 regional center for a particular EB-5 investment participant.

Selecting the Right EB-5 Regional Center

While it is true that EB-5 regional center investment offers a generally higher level of security than going direct, not investing the necessary time in vetting prospective regional centers could prove perilous. Why wouldn’t every investor want to ensure they are entrusting their hundreds of thousands of dollars in EB5 investment capital to a reputable network?

Meticulous due diligence will help you uncover a regional center’s levels of experience, track record, and even simple professionalism. Consider each of these key aspects when deciding on which regional center to partner with.

The Developers Your Center Works With

Review both the developers and the types of projects each center in your consideration set has worked with and on. Take a deeper dive into each of the developers they list. Are they trustworthy? Can you find their construction lenders and general contractors easily? Determine the level of commitment developers have to their own projects. One way to do that is to find out how much of their personal funds have gone into them.

The Center’s Rate of Investment Success

Look at the number of EB-5 projects a regional center has worked on. Find out how many of its EB-5 investment participants ultimately secured their U.S. green cards. Consider its track record specifically on I-526 and I-829 approvals. You can also safeguard financial interests by confirming whether previous investors had their EB5 investment capital returned successfully.

The Team You Would Potentially Work With

An examination of the team members themselves can also provide a lot of insight into how your investment may pan out. Look at individual credentials and relevant experience areas. Everyone involved should have a history of working on EB-5 investments and in EB-5 project development. When you have questions, ask them. Get to know the team that could be potentially handling your investment capital before you hand it over. These are the people you would be working most closely with to complete your EB-5 investment.