The purchase of real estate would likely not qualify as an EB-5 investment for various reasons. First, all EB5 investments must generate enough jobs through the venture, and simply buying property does not create jobs by itself. Furthermore, program regulations require EB-5 investments to meet the at-risk requirement. This means that the EB-5 applicant is subject to financial gain as well as partial or total loss of their investment capital. Because real estate is a property with fixed value, it cannot qualify as at-risk.
Within the EB5 investment process, prospective applicants must invest in a new commercial enterprise (NCE). These are strictly defined as for-profit entities engaged in lawful business activities. Any of the following business structures can be considered an NCE: individual ownership, limited or general partnership, joint venture, holding company, corporation, or trust. The official definition of an NCE does not include noncommercial activity, such as purchasing and owning real estate.
To meet program regulations, all EB-5 investments must create or preserve at least 10 full-time, permanent jobs per investor. As aforementioned, this typically excludes real estate purchases as viable investment options. However, the purchase of rental properties may qualify for the EB-5 program. If a business was created to manage the properties and generate the necessary jobs, the purchase of rental property can satisfy the EB5 job creation requirement.
Every EB-5 investment is different. As such, it is important for investors to consider the services of an immigration attorney. Purchasing rental property and hiring property managers can be a tricky situation to navigate. While it may be possible for this plan to qualify, there are multiple areas that can put the investment at risk of denial. An immigration attorney would need to review the specific circumstances to determine if such an investment plan would qualify for the EB-5 program.
