All investments carry a certain degree of risk. EB-5 investors should conduct due diligence (that is, do thorough research on) their projects and their regional centers to find out how much risk is involved and determine whether the project is a suitable choice. Investors are not only concerned with gaining a financial return; they also want to be confident that the EB-5 project will allow them to become permanent residents of the United States. Therefore, conducting due diligence is a critical step of the EB-5 investment process.
In the regional center model of the EB-5 program, investors must consider the following questions when conducting due diligence:
1. Has USCIS approved the project?
Investors should look for EB-5 projects that have already been approved and reviewed by USCIS. In addition to USCIS approval, the project may require other licenses or permits. The regional center in charge should be able to confirm the project’s status.
2. Can the project meet the employment creation criteria?
Investors who want to become permanent residents through the EB-5 program must prove that they created 10 qualified, full-time jobs for U.S. workers. Consequently, they should look for projects that aim to create more than 10 jobs per investor and are thus prepared for possible contingencies. The regional center in charge must time job creation strategically to make sure that each investor is credited with the right number of jobs.
3. Has the regional center helped previous investors file successful visa petitions?
Reliable regional centers provide prospective investors with information on how many successful visa petitions they have facilitated in the past. Naturally, regional centers with a history of denied visa petitions should be seen as less trustworthy unless they can provide legitimate explanations for those denials.
4. How long has the regional center been operating, and does it have a redeployment plan for the funds?
The regional center should have a solid track record of managing projects and funds in the EB-5 program; experienced regional centers are more likely to facilitate successful visa petitions and comply with all of USCIS’s guidelines. Additionally, the regional center should have a redeployment plan to ensure that the invested funds remain at risk for the required amount of time.
Since conducting due diligence on projects and regional centers can be complex, many investors have benefitted from working with consultants who specialize in the EB-5 program. These advisors can provide invaluable advice and warn investors against potentially disastrous fraud or misrepresentation.