The EB-5 visa program is a great way for foreign investors who want to become US citizens to gain permanent citizenship, but because of the minimum requirements an investment of between $500,000 or $1 million, and the creation of at least 10 permanent jobs for US workers, it can be utilized only by wealth foreign investors.
1. Recapture their original investment
2. Gain permanent citizenship in the US
Achieving these goals is not always easy. To have the best chance at success, the foreign investor should proceed cautiously and carefully select the best EB-5 investment vehicle to put their money behind.
Two Ways to Invest
The EB-5 program allows foreign investors to invest in two different ways. The first is the traditional program, which requires investing a minimum of $1 million in a business, actively managing it, and at the same time creating at least 10 permanent, full-time jobs for US citizens.
The EB-5 regional center approach allows developers to pool funds from foreign investors into a limited partnership that then invests its capital into government-approved qualifying projects. In this approach, the minimum investment by the foreign national is lowered to $500,000 because the projects must be within a designated geographic area that is either rural or has very high unemployment. Indirect job creation also is allowed under this program.
Because the investment bar is lower and the job creation requirement is relaxed, about 90% to 95% of foreign investors choose to go the regional center rather than the traditional approach.
Number of Regional Centers Booming
Since there are a lot of foreign investors seeking to use the EB-5 program to gain citizenship, there has been a boom in the number of regional centers created in the US in recent years. In 2008, there were fewer than 20, but today there are 22 in Florida. There are currently 174 approved regional centers in 40 states, with new ones being launched every month.
Within these regional centers, EB-5 investment money is responsible for building infrastructure as well as the construction of hotels, office buildings, shopping centers, schools, retirement communities, hospitals and many other big-money projects.
Investments Yield Modest Returns
Generally, investing in a regional center isn’t going to provide huge returns on your investment. These projects usually have a more modest rate of return. but the objective of the EB-5 foreign investor isn’t necessarily to get rich. It is to gain residency in the US for themselves, their spouses and their children.
Statistically, the EB-5 visa applications have an extremely high success rate (93%) compared to other immigrant visa categories.
The only downside is that you have to be very careful in selecting which regional center to invest in. Before putting all their chips on an EB-5 investment, a foreign investor should carefully evaluate a qualifying EB5 regional center project to make sure it’s worthwhile. Fortunately, there is a growing number of EB-5 consultants who can provide objective advice and information to foreign investors considering comparable regional centers.