A lucrative substitute to the H-1B visa, the EB-5 program has quickly found suitors among foreign nationals looking to invest in the United States. In the program, the US real estate sector has emerged as one of the most preferred modes of investment by foreign individuals who are looking to become eligible for the EB-5 Immigrant Investor Visa Program. It offers permanent residence to EB-5 investors, who invest a specific amount of capital to create at least 10 jobs for a minimum period of two years in the USA.
Similar to the investors, real estate developers also benefit from the EB-5 program. The program enables them to accumulate the necessary capital for a large-scale project that generates and sustains several jobs for Americans. It is also a safe avenue for investing for foreign nationals that offers lucrative returns, with added benefits.
EB-5 Program in Real Estate
EB-5 real estate investments are comparable to other investment opportunities since it allows foreign nationals to invest in varied real estate projects in the USA. These projects can be residential, commercial as well as industrial land development proposals and offer lucrative returns to the investors.
This model of investment opportunity received a boost following the 2008 financial setbacks when a large number of real estate projects failed to acquire the necessary capital from conventional modes.
Next year, US Citizenship and Immigration Services (USCIS) announced that construction jobs from real estate development projects would be counted within the parameters of job creation requirements of the EB-5 program – resulting in a sharp increase in real estate investment by foreign nationals in premier locations in Texas, Los Angeles, New York, Washington DC and other cities.
An EB-5 real estate investment can be made in two avenues – direct investment and a regional center project. Investors can look up the requirements as per their desire for investment and become party to the necessary benefits that come with these programs.
Benefits of EB-5 real estate investments
EB-5 real estate investments come with added advantages for the investors. In direct investment, the investors are allowed to set up a business or acquire one, directly. In this avenue, they are also allowed to manage the operations of the business themselves without the need for third-party interference. Statistically, 2%-5% of the total EB-5 appeals are produced through this option.
In 2018, almost 250 applicants selected the direct investment program for their application. Investors with access to large amounts of capital often end up choosing this avenue.
On the other hand, investors who do not have access to significant funds stack their capital in funds of a particular regional centre that focuses on economic development. Almost 95% of total applicants choose this module of investment to receive permanent residency and added benefits.
The real estate sector offers EB-5 investors with palpable investment opportunities that can be objectively reviewed. The demand for these projects is growing across the USA, offering the potential of a profitable return on investment (ROI). Real estate also offers the creation of a large number of jobs that not only meet but often exceed the criteria of the EB-5 program.
Are there any drawbacks?
Just like there are multiple benefits of EB-5 real estate investments, it comes equipped with some drawbacks that must be considered before investing. These drawbacks include the risk of fraudulent schemes, excessive local administrative fees as well as immigration risk in selected projects. However, these can be successfully avoided with an informed decision over the US real estate market and its dynamics.
Things to consider before making EB-5 real estate investments
An informed decision before investing in the EB-5 real estate helps investors avoid making bad bargains. To begin with, investors must always consider collaborating with reliable partners who have a history of transparency and completing successful projects. Job protection must also be considered in their target real estate project since it is a core part of the EB-5 programs in the USA – especially if the investor decides to use the services of regional centres.
Speaking about jobs, investors must keep in mind that the form I-526, which is the immigrant petition by standalone investors, must consist of a business proposal that demonstrates the creation of a minimum of 10 jobs in the EB-5 real estate project. Regional centres that have obtained an approved petition are always preferable over others that don’t have it.
Other things, such as direct job creation, investing in large projects and proper structure of the project must also be considered before making a decision.
Is EB-5 real estate investment secure?
As per the USCIS, an EB-5 investment must have an “at risk” tag before the investor completes their I-829 application. Similar to all investments, EB-5 real estate investment comes with the potential of risks, but also offers a host of benefits, especially in obtaining permanent residence in the US.