There are two EB5 investment models that investors can choose from: direct investment and regional center investment. In the past, multiple EB5 investors could pool their funds with either investment type. However, since March 2022, only regional center-sponsored investment projects can have more than one investor.
Although some EB5 investors prefer direct investment, the majority of EB-5 investments are made through regional centers. This popularity can be attributed to a number of factors, including the ability to pool funds from multiple investors. This can make it easier for an investor with limited funds to participate in the EB5 program and pursue permanent residency. Moreover, many regional center projects are located in targeted employment areas (TEAs), which allows investors to invest $800,000 rather than $1,050,000.
Pooling multiple investors’ funds is typically accomplished by forming a limited partnership in which the investors are limited partners. This allows investors to take a more “hands-off” approach with little involvement in day-to-day business operations; they only need to vote on major policy decisions. This allows regional center investor’s to live anywhere in the United States regardless of their project’s location.
EB5 investors in regional center-sponsored projects do not invest directly into a new commercial enterprise (NCE), Instead, they purchase equity stakes in a regional center’s investment fund. This fund is then used to purchase equity in the project’s job creating entity (JCE). In essence, regional centers operate as intermediaries between investors and project managers. They oversee the movement of capital into the project, ensure compliance with United States Citizenship and Immigration Services (USCIS) regulations, and provide investors with much of the necessary documentation for the two visa petitions: Form I-526E and Form I-829.
Prospective regional center investors should first consult an EB5 immigration attorney and conduct thorough due diligence on the regional centers. Doing so can inform an investor on the center’s financial cushion, projected job creation, and other factors that can impact the success of an investment.
