Many of you work regularly with wealthy international clients who are seeking to invest in the United States, as this affords them more security for their money than they could possibly have in their homeland. Often, these clients also desire to immigrate to the United States permanently. In previous e-newsletters, I have mentioned the EB-5 Immigrant Investor Visa as one method available to your international clients who wish to essentially “buy” a Green Card through their sizable investment into a new or existing U.S. business.
One subsection of EB-5 law allows for a minimum investment of $500,000 into an “EB-5 Regional Center”, which is a development located in a Targeted Employment Area and approved by the U.S. Citizenship and Immigration Services (USCIS) and permitted to accept foreign investment funds for EB-5 Visa purposes. Currently, there are approximately 847 different EB-5 Regional Centers approved by the USCIS, however, they have varying business models the potential return on investment between Regional Centers can differ dramatically as well.
One of the business models that I have seen thus far which I feel is the most beneficial to EB-5 investors is a certain luxury condominium development. I like this particular model because it allows the investor to put in $500,000 to fulfill the requirements of the EB-5 Visa, and then reserve one of the condo units with a 30% down payment. Once the investor receives their permanent residency status, they can elect whether to be repaid their $500,000 investment, or to move this money into payment for their previously reserved condominium unit. For instance, I have a client that is interested in one of the smallest units in this development which has a pre-construction price tag of approximately $700,000. He would have to put $210,000 (30%) down to reserve the unit, and he would have to make a $500,000 EB-5 investment into the Regional Center. In the future, he would be able to move the $500,000 in investment funds being returned to him over toward the ownership of the condominium unit. In essence, these investors can “buy” their green cards for the entire amount, but they are really building equity in something and this is how they can cash out later and get a return on their investment. They can buy at pre-construction prices and later, the price will go up substantially. The investor can purchase the unit with their eventually released investment money or they can finance the purchase instead. They can sell the unit for a profit or rent it out to produce income.
Additionally, EB-5 invested funds comprise only 10% of the developer’s funding of this project. This project is already underway, so they are not dependent on EB-5 money to get everything going or to keep it going.
Realtors would be eligible to receive commission for the non-EB-5 portion of the transaction. If you would like more information please contact me.
Don Gonzalez, Esq.