How to Vet EB-5 Projects

Since an EB-5 investment must always be “at risk,” it should be undertaken with caution and care. Acceptable EB-5 projects comprise various business models, spanning an array of industries.

Typical projects include:

  • Commercial or residential real estate
  • Hotels
  • Casinos & convention centers
  • Manufacturing facilities
  • Infrastructure projects
  • Medical facilities
  • Places of entertainment
  • Restaurants
  • Retail centers
  • Stadiums
  • Agricultural development (e.g. farms, wineries, etc.)

The type of EB-5 project you invest in is arguably the most important choice you make. Why? Because not only does the project have to meet USCIS criteria, but the enterprise has to be a viable business that serves to create the 10 or more jobs required. Ultimately, an EB-5 investor’s permanent resident status hinges on the success of the project.

Therefore, EB-5 investors should do their due diligence before deciding where to invest, by answering the following questions:

  • What is the Regional Center’s track record? How many EB-5 projects have they already successfully developed?
  • What are the credentials of the principals of the project?
  • How many EB-5 investors are required for the project, and how many have already invested? How will the jobs created be divided among investors?
  • Have all their past investors’ I-526 and I-829 applications been successfully approved?
  • How long has it taken them in past to pay back investors?
  • Has the Regional Center or anyone in its leadership been involved in lawsuits or filed bankruptcies?
  • How will the business you are investing in create jobs?
  • What are the risks associated with the business?
  • Are there projected returns on the investment?
  • Is the project already under construction? How far away is it from completion?
  • How many other EB-5 investors participating in the project?
  • What percentage of funding not tied to EB-5 petitions will be used on the project? If so, what is the source of this funding?
  • How will EB-5 investors be compensated if the project fails? How are they collateralized?
  • After obtaining permanent resident status, how will the investor extract himor herself from the business?
  • At what stage of the application processare other EB-5 investors participating in the business?
  • What will happen to the investment and related fees in the event an investor’s I-526 petition is denied?