Why Real Estate Is the Most Viable Industry for EB-5 Investments

The EB-5 program grants foreign investors U.S. legal permanent resident status in exchange for an investment of $1,050,000 in a new commercial enterprise (NCE) or $800,000 if the NCE is in a targeted employment area (TEA). Additionally, the investment must create at least 10 full-time jobs for American workers.

EB-5 investors can either invest directly in an NCE or through a regional center. There are also various investment options EB-5 investors can choose from. They can invest in real estate projects, the manufacturing industry, mining operations, oil and gas, transportation projects, technology, green energy, etc.

However, simply making an EB-5 investment does not guarantee that you will get a U.S. Green Card or your invested money back. Obtaining your EB-5 Green Card and recouping your investment depend on several factors, including the financial strength of the EB-5 project, the number of jobs created, and market trends. Specific industries also carry a much higher risk of volatility, financial failure, and investment loss.

Over the years, the real estate industry has proven to be the most viable option for EB-5 investments. This is because it is less volatile, offers more security, and has a higher repayment success rate.

In this article, we’ll examine why real estate offers the most viable EB-5 investments and the types of real estate investments available to EB-5 investors.

Why Real Estate Projects Offer the Most Viable EB-5 Investments

Below are some reasons real estate projects offer the most viable investment options for EB-5 investors.

Stability and Security

Many alternative EB-5 investment options, such as mining operations, steel manufacturing, and oil and gas, are highly volatile and therefore high risk. And investing in high-risk commodities can harm your chances of getting a Green Card.

Unlike the highly volatile manufacturing industries, real estate offers a more stable investment option, as the demand for real estate is more predictable. The housing market is fast growing, and there’s been an increasing demand for residential real estate, particularly single-family home units and townhouses in rural TEAs.

It’s also easier for EB-5 investors to assess a real estate project’s financial strength and chances of project completion. They can even visit and inspect the project site themselves.

The real estate industry is also subject to less geopolitical turmoil and fewer policy changes than other sectors, guaranteeing longer-term investment stability.

Higher Capitalization

Real estate projects, particularly residential developments in rural TEAs, typically enjoy better capitalization than other EB-5 project industries. Most traditional lenders are unwilling to invest in highly cyclical and volatile projects such as steel manufacturing, mining operations, or oil and gas. As a result, these projects tend to rely heavily on EB-5 funds, which increases their financial and immigration risks.

On the other hand, rural residential real estate projects are currently in high demand, and traditional lenders may be more willing to lend to rural real estate developers. The presence of senior debt from traditional lenders reduces a project’s financial risk for the EB-5 investor, making it a more secure investment option.

Job Creation

An NCE must create and sustain at least 10 full-time jobs for two years for an EB-5 investor to qualify for their permanent Green Card. If the project fails before completion or experiences downtime, the required jobs likely won’t be created, and EB-5 investors may lose their permanent residency status and investment.

For EB-5 regional center-sponsored real estate projects, direct, indirect, and induced jobs are considered part of the qualifying job creation. This means that EB-5 real estate projects typically create more jobs than are required, making it easier for investors to meet the job creation requirement and obtain their Green Cards.

Faster Path to Legal Permanent Resident Status

In many industries, a project must be completed and operational before the investor can create the required jobs and qualify to remove conditions on their Green Card. In other words, the investment has to be sustained for a more extended period to meet this requirement.

It’s even worse in the mining and natural gas industries, where drilling and exploration can take decades before actual project development. Tying your EB-5 Green Card to such an investment may result in a lengthy delay and longer investment timelines.

Meanwhile, investing in real estate, especially in rural TEA projects, is a faster way to obtain a Green Card since construction jobs easily count toward the job creation total and USCIS prioritizes processing rural TEA EB-5 projects. Depending on the project financing structure, investors may also get a quicker investment repayment.

Real estate projects typically offer an investment timeline of three to seven years, which is much faster than what manufacturing industries offer.

Faster Investment Repayment

Manufacturing industries typically rely on income or cash flow to repay investors. So, the project has to be completed and must start generating profits before investors can be repaid. This results in longer investment timelines, and investors may lose their money if the project fails to become profitable.

Real estate projects present a more straightforward and faster path to investment repayment. Unlike manufacturing industries, real estate projects rely less on cash flow for investment repayments. Depending on the investment financing structure—which is typically outlined in the offering documents—EB-5 investors can get their funds back once the property is refinanced or sold.

Types of Real Estate Projects Commonly Used for EB-5 Investments

A variety of real estate offerings are available to EB-5 investors. EB-5 real estate offerings are typically residential, commercial, or mixed-use developments. Each has its unique advantages and risks.

Residential Developments

This category includes single-family homes, multi-family homes, condominiums, and apartment complexes that foster community living. Single-family home development projects, such as EB5AN’s rural Twin Lakes project, are in high demand, as they usually cater to retirees who want a quiet environment and can afford to buy homes.

Additionally, Twin Lakes—a single-family home development for active adults—offers a repayment guaranty, job creation guaranty, and I-526E approval refund guaranty. The 1,300-unit housing development has created all the jobs required for its EB-5 investors and has sold 662 units as of July 31, 2024.

Commercial Developments

While commercial real estate, such as office complexes, have yet to fully bounce back to their pre-pandemic rates, hotels and resort developments in TEAs still offer viable EB-5 projects. These developments are primely located around natural attractions and mainly target tourists and vacationers.

Mixed-Use Developments

Mixed-use developments combine the creation of residential, commercial, and recreational spaces, providing a more comprehensive community development project.

EB5AN Offers Low-Risk EB-5 TEA Projects

While EB-5 applicants can invest in various industries, for the reasons outlined above, real estate remains the most viable option for EB-5 investments. However, investing in a real estate project does not automatically guarantee Green Card approval or investment success. EB-5 investors must conduct thorough due diligence, including selecting the right regional center, to avoid losing their money and immigration status.

EB5AN offers first-rate, low-risk EB-5 regional center projects within TEAs. All our projects have received I-956F exemplar approval from USCIS. In 10+ years of practice, we’ve helped over 2,300 families relocate to the U.S. as legal permanent residents. We can guide you in selecting the best real estate project for your EB-5 investment.

To learn more about EB-5 real estate projects, schedule a one-on-one consultation with our expert team today.