At EB5AN, we care about transparency and quality because we care about you, our investors.
We have spent significant time and resources to increase transparency—not just within our projects, but across the industry as a whole. We have consistently set higher standards, encouraging investors to expect more from their EB-5 project sponsors. EB-5 investors deserve to be treated with the same level of respect as any other investor. For this to happen, transparency and a willingness to innovate and improve the status quo are key.
While transparency is critical, it is not the only factor investors should consider. Transparency simply allows investors to see how risky a project is. A high-risk project is not necessarily a smart option just because the EB-5 sponsor is transparent about the level of risk. That is why, in addition to promoting transparency, EB5AN has worked hard to reduce risk to investors through high-quality projects from developers with proven track records.
EB5AN’s founders and managing members, Sam Silverman and Mike Schoenfeld, recently spoke at length about transparency and risk in the EB-5 industry and how these two factors overlap. They talked about what motivated them to get into the EB-5 space and why transparency, quality, and innovation are central to EB5AN’s core values.
In this article, we highlight some of Sam and Mike’s major motivations for making EB5AN the leader in EB-5 transparency. We then discuss how they approach risk and offer projects that minimize risk to EB-5 investors. Finally, we look at how EB5AN empowers EB-5 investors with a range of investment options.
Watch their conversation in full below.
Why EB5AN Focuses on EB-5 Investment Transparency
Transparency is a big part of why we are in the EB-5 industry. Sam and Mike started EB5AN in response to what they saw in the EB-5 market back in 2011 and 2012. At that time, the market was full of very risky projects. Despite the high level of risk to investors, these projects were successfully raising EB-5 capital. This meant that investors—who in many cases did not speak English and who were unfamiliar with the U.S. real estate investment market—were investing in these high-risk projects. And most did not know how risky these projects were.
Nothing is inherently wrong with investing in high-risk projects. Sometimes more risk means more potential for reward. What was wrong was that, often, these investors had not been shown critical project and financial information. As a result, they did not understand the financial and immigration risks before investing. Transparency is the key difference here.
Investors deserve to have all the information they need to make informed decisions. Real transparency allows EB-5 investors to understand how risky an investment is before they invest. We believe this is a basic right that all EB-5 investors should demand. No project should be able to conceal how EB-5 funds will be used, downplay how long funds will remain invested, inflate the value of other sources of capital, or obscure how the project is structured.
At EB5AN, talking about transparency is not a marketing ploy—we are determined to increase transparency for our investors and for investors across the EB-5 industry. Our record speaks for itself and sets us apart. We are committed to giving our investors realistic expectations about how long their money will be invested and how long the immigration process could take. We make it clear how EB-5 funds will be used. We do not merely tell investors how much capital is coming from other sources—when applicable, we provide proof of where these funds are coming from in the form of financial statements and loan documents. We are fully transparent about our projects and how they are structured.
On a broader level, as part of our commitment to transparency, we contribute substantial resources to create informational content, answer questions, provide interviews with real investors, and more.
We have conducted over 100 webinars on a variety of topics ranging from basic EB-5 program details to advanced discussions on source of funds. Our website has grown into one of the most active and trusted platforms for EB-5 information, news, and analysis. More than 20 of our EB-5 investors have shared their experiences finding a project, choosing an attorney, investing, and moving through the immigration process. We have over 800 informative YouTube videos and hundreds of helpful articles. And we have developed a number of investment frameworks, tools, FAQs, and other resources.
Beyond all of that, EB5AN does something that few, if any, other EB-5 companies do: we give EB-5 investors direct access to our principals. Sam and Mike are available and engaged, allowing investors to speak directly with the people who structure EB5AN’s projects and make the decisions that will affect their immigration process.
We would not spend this much time and effort on transparency if we did not care about our investors. But because we believe transparency is vital, we have placed a strong emphasis on making it possible for investors to do as much research as they would like. That means the information needs to be readily available—and not just information on the EB-5 program and the immigration process, but on how to assess risk and make well-informed decisions.
While we have made significant progress, more can be done, especially within the industry more broadly. That is why we are striving to change investor expectations and raise industry standards.
For example, we hope that other companies will also start to provide investors with project and developer financial statements. It is standard for financial documents to be shared with investors as part of their due diligence in any other type of investment, but this practice is rare in the EB-5 space. We believe this must change.
EB5AN’s Approach to Risk
Because we value our investors and their main goal of obtaining U.S. residency, we approach risk conservatively. Specifically, we carefully vet developers, and we structure projects in a way that reduces immigration and financial risk. Our approach to risk is another way we stand out in the industry.
How EB5AN Limits Immigration Risk
The primary reason to make an EB-5 investment is to acquire a Green Card. As a result, the main risks for an EB-5 investor revolve around obtaining permanent U.S. residency.
One of the top immigration risks for EB-5 investors relates to Form I-956F approval. This approval indicates that USCIS has reviewed all project documents and found that the project complies with the EB-5 program. To limit their risk, we encourage investors to invest in EB-5 projects that have already been approved or are being sponsored by an EB-5 company that has a perfect record with multiple project approvals.
Another major immigration risk relates to job creation. Projects must create at least 10 jobs for each EB-5 investor. If a project fails to create enough jobs, some or all of the project’s EB-5 investors may be denied permanent resident status. To limit their risk, we encourage investors to choose EB-5 projects with developers who have proven track records of completing projects on time and on budget. The best projects have already created a substantial number of jobs—preferably more than enough for all EB-5 investors.
The final major immigration risk to EB-5 investors has to do with their personal qualifications. If an investor is not admissible as a U.S. resident or cannot prove his or her EB-5 investment comes from lawful sources, USCIS will reject his or her immigrant application. To limit this personal risk, we encourage investors to retain skilled, independent immigration counsel. These experts help investors navigate the often complex EB-5 process.
How EB5AN Limits Financial Risk
The EB-5 investment amount is a substantial sum. While many EB-5 investors place a lower priority on earning strong returns on their investments, most—if not all—EB-5 investors are highly interested in keeping their funds as safe as possible. As a result, financial risk is often a critical component for investors when selecting a project.
Financial risk for EB-5 investment is much like the financial risk related to any investment. If the project is not completed or fails to make enough money through sales, revenue, a refinancing, etc., investors may not earn a return or even be repaid in full or in part.
To limit financial risk, we suggest that EB-5 investors choose projects developed by companies with long records of success completing the same kinds of projects and repaying investors on time. Investors should also look for projects that have received senior financing from institutional lenders. If a project has a senior loan, it means the lender has carefully reviewed the project and is comfortable providing it with financing.
Developer Track Record
As discussed above, one of the main factors that affects immigration and financial risk is the developer. Finding a project with a strong developer is key since the developer is responsible for both creating enough EB-5 jobs and repaying its investors.
To know whether the developer is reliable, you need accurate information. You need to know the company’s history and reputation, its current financial state, and what kinds of guaranties it offers EB-5 investors. Transparency is obviously vital here.
Financial documents are an important part of developer transparency. A developer should be willing to back up its claims with financial statements, signed loan agreements, balance sheets, and inventory and sales documents.
To meet our high standards of transparency and quality, we work only with proven developers. They need to have strong financials, must be willing to be transparent with our investors, and must offer key safety features. While no EB-5 project can guarantee any investor will be repaid, a developer can offer certain guaranties related to job creation, refunds for denied immigrant petitions, and even loan repayment. Such guaranties greatly reduce the risk investors face.
One developer EB5AN has worked with for years now is The Kolter Group, which has an exemplary track record. Kolter is one of the 20 largest private developers in the southeastern United States. Since 1997, Kolter has invested in projects with an expected value of over $29.0 billion, completed over 100 residential projects, and delivered over 27,000 units. Today, Kolter has investments in over 90 additional residential projects, expected to deliver over 65,000 units. In over 25 years of completing projects, Kolter has successfully repaid billions in loans and has never failed to repay a loan. Kolter’s track record of successfully repaying loans and finishing projects provides for strong and long-standing relationships with leading financial institutions in the United States, including some of the nation’s largest banks.
EB5AN’s Approach to Project Options
EB5AN has been one of the most adaptable EB-5 regional center operators in the industry. Whether responding to legislation, policy changes, or economic cycles, EB5AN has been able to quickly pivot to provide investors with projects that best fit their needs.
Under the EB-5 Reform and Integrity Act of 2022 (RIA) and current USCIS policy, we are able to offer investors a diverse array of projects.
Rural Versus Urban EB-5 Projects
The RIA introduced new benefits for investing in rural projects. First, USCIS gives priority processing to the initial immigrant application of rural investors. Second, rural investors gain access to a category of set-aside visas that make up 20% of all EB-5 visas. These rural visas are especially valuable for investors from countries with high demand for EB-5 visas, like Mainland China and India, because the rural category is current and not subject to visa backlogs.
Urban investors gain access to a smaller category of set-aside visas that make up 10% of all EB-5 visas. The high-unemployment urban visa category is current at the time of writing, but data suggests it is filling up fast for investors from certain countries.
Because the rural and urban categories have their own advantages and disadvantages, we strive to give investors a choice by offering projects in both. Some investors face extensive delays unless they invest in rural projects. For investors who face no such delays, the choice between rural and urban depends largely on their situations and preferences.
In either case, the rural and urban projects we offer are high-quality, low-risk options that set the standard in the EB-5 industry for investor safety. We want investors to be able to choose what works best for them and their families.
Shorter Versus Typical Project Durations
Prior to the RIA, the typical duration of an EB-5 investment was at least five years. That has changed since the RIA, and now shorter-duration projects have become viable. But a shorter investment duration typically means additional risk. Some investors consider any additional risk unacceptable. Other investors, however, are fine with added risk. We believe the key here is that investors understand the risks and potential rewards of investing in shorter-duration projects before they commit their funds.
At EB5AN, we offer excellent projects with shorter durations, but we also recognize that these projects are not ideal for every investor. EB-5 is no longer one size fits all, and we are committed to providing investors a menu of compelling EB-5 investment options.
EB5AN’s Commitment to You
At EB5AN, we pride ourselves in leading the industry in transparency and quality. We are committed to offering our investors a range of best-in-class lower-risk projects, along with all the information needed to make informed choices.
If you have any questions about EB5AN or our practices, please schedule a one-on-one call today. We look forward to hearing from you.
