April 30th, 2009 |
A number of regional centers offer investment in a portfolio of projects – the concept apparently being that you are spreading your risk by investing in a range of concepts. The portfolio can cover a multiple of concepts from hotels, health centers, hospitals, homes for the elderly.
At first sight the concept seems interesting, however it is critical to have a clearly laid out program for exactly where the funds are being invested.
Although the mixed portfolio approach appears to spread the risk there are significant questions to be answered.
Tomorrow we will look at Business-Based Regional Center Projects.
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Tags: eb-5, investment, regional center
Posted in Immigration | No Comments » |
April 29th, 2009 |
Infrastructure-based regional center projects are those that, to a large extent, rely on partnerships and/or investments in community or state and government agencies. Primarily, these funds are loaned out to these sorts of agencies and entities, or to recommended projects that have more of a regional or community development focus. Because of the nature of the investment, these types of regional centers may offer a more secure, yet lower return investment opportunity.
There are a number of other comparisons and differences to consider, in particular in comparison to real estate-based ventures. For example, these investments are loan-based and have a definite period of repayment. You will know precisely when the investment will be returned, and it will not rely on market factors. At that time the partnership may be dissolved by design of the contract, or liquidated according to an outlined exit strategy. Generally speaking, though, these types of investments have a definite and limited period for return, which makes the situation overall more predictable.
Also, because infrastructure-based loans are often worked in conjunction with government agencies, there is local agency or state involvement. While this does not guarantee a risk-free investment, many times it results in an increased level of project oversight, as the agencies and entities involved are also keeping eyes on their interests. This is not always a given and cannot be taken for granted, but it is one factor that tends to work in favor of infrastructure-type regional center projects.
In addition, the investment is normally tied to the loans that are made, and so they have a defined rate of return that is based off of the terms and interest rates on the loan. The down side to that, however, is that the rate of return is usually more modest than higher risk investments, such as those that are real-estate based. So while an infrastructure-based regional center program may offer the benefits of a simpler, clear exit strategy and pre-determined rate of return, they will not yield as high a profit for you as an investor. Again, it all depends on what your priorities are, or if you want your EB5 investment to work as more of a multi-tasking investment.
All in all, infrastructure-based regional centers can be (but surely not always) “safer” investments. However, again, much depends on the foresight and planning of the subject project to begin with, and so it is not enough to assume that an infrastructure-based project is a guaranteed thing because of the nature of it or the players involved. Something else to keep in mind is that without property, there may be no real collateral for an infrastructure-based project, and so in effect there could be even less security. Always keep in mind that if there was not a level of risk, the investment would not qualify as a visa-eligible investment to begin with.
Tomorrow we will look at Fund-Based Regional Center Projects.
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Tags: eb5, infrastructure, investment, regional center, visa
Posted in Immigration | No Comments » |
April 28th, 2009 |
A great many, probably the majority, of regional centers are based on investment models that capitalize on the real estate industry. Many of these are investments in and developments of medium to large projects and mixed-use commercial and residential facilities. Their investment models range from profiting from the proceeds of leases and rentals to profiting from property sales.
At some point in the game nearly all real estate-based regional centers rely on selling at a profit as an integral part of the investment’s exit strategy. Even if the fund or project continues on as the principal owner, you will quite likely not want to remain a participant for an extended period of time. Five years is an average target for an RC exit strategy (although you can choose to remain or reinvest, most RC’s operate on this basis, as this time frame coordinates with the length of visa conditions and the time frame for when you will be eligible to apply for U.S. citizenship, if you so choose). At the end of that five-year period the typical exit strategy is to sell your interests in the real estate investment.
In effect what this comes to mean is that real estate-based investments are highly reliant on the real estate market; that is a market that, as we have seen, can be very volatile and subject to consumer and investor emotion, among so many other factors. If the market is “down” when you are planning your exit from the investment, you run the risk of taking a serious hit on your initial investment. Likewise, if the market is struggling during that time when you are relying on leaseholders and rentals for regular returns, that portion of your income that is based on that income could also suffer.
Of course the flip side to all of this is that, just as real estate markets go down and have their periods of struggle, they also go up; and when they go up, the rewards can be staggering. Historically speaking, real estate investments do pay off in the end, usually in very big ways, as long as you can stay in the game and capitalize at a profitable time.
To summarize real estate-based regional center investments, you could say that there are many factors on which your investment will rely that will be beyond your, or any manager’s, control. Your return on investment will rely on factors such as the quality of maintenance and good management of not only the fund, but also the properties that are invested in with the fund. One of the greater benefits to real estate investments is that, as long as the investment was well-planned and “bought right,” the property is collateral for the investments, and offers some amount of security.
Additionally, profitability will rely on the strength of the real estate market. At times, depending on your willingness to take a loss or minimized return on your invested capital, your time period for investment could be significantly lengthened as you wait for the market to come back to a point of profitability. This can make that investment period more open-ended, even if the plan is for a five-year exit strategy. This is what creates that element of investment risk; and as we know, all EB5 investments must be subject to some level of risk.
In the end real estate-based regional center investment may mean higher risk; but on the flip side, that also means it has a potential for higher return and profits. Only you can decide how those two should be balanced, but something else that you should always remember is this: even though real estate investments as a whole are more of a risk, no two investments are the same. There are limitless factors which determine how risky a given investment will be. There are an indeterminate amount of issues that can come into play to raise or lower the risk even between two given real estate investments. Depending on the level of research and planning, and on market factors and regional impacts, two real estate investments could be very much alike on the surface, and altogether different from an investment standpoint when you dig deeper.
What this means for you as the investor is that you cannot simply choose between one type of regional center investment or another, you also have to choose very carefully between the options within that category. For any type of investment, you will need to choose one that is proven, well-managed, and solidly backed with an excellent business plan. Before you do get to the point of choosing among types, however, you will want to consider the merits of infrastructure-based regional centers and their investments, too.
Tomorrow we will look at Infrastructure-Based Regional Centers.
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Tags: eb5, investment, real estate, regional center
Posted in Immigration | No Comments » |
April 27th, 2009 |
There are essentially two fundamental types of regional centers. By and large, regional centers are either investing in projects that are real-estate based, or projects with a basis in infrastructure or development. In addition, a few are investing in agriculture and business.
There is no real right or wrong type of center to be investing in. Largely, the type of center that is right for you will depend on a number of personal factors and investment-style preferences. However, it is helpful to be aware of the fundamental differences between these types of centers, so that you can begin to match your own styles and preferences to the mission and business of regional center candidates. We’ll start off by discussing some of those differences, and then pick up again and talk more about how you can get the right advice to make the best decision for you, personally.
Tomorrow we will look at Real Estate based regional centers.
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Tags: eb-5, regional center
Posted in Immigration | No Comments » |
April 24th, 2009 |
The truth of the matter is that choosing the right regional center really does matter, a lot. Not only is your immigration and residence at stake, but the rest of your life is relying on your choosing the right regional center to back you. After all, this is a serious investment of a very large sum of cash, and that can never be taken lightly. At the very least you want to protect your principal investment; and keep in mind the performance of the regional center could well have an impact on the removal of conditions from your green card. This is investing in America, and should be treated with all the seriousness of any investment that you would consider making.
So what does the right regional center look like? At its most basic, the right regional center is one that has:
• USCIS approval and designation as an active regional center
• A proven track record, not only of investment and business success, but of visa approval, too
• Or, if a new center, a solid, strong business plan and the knowledge to back them and you throughout the entire immigration process
• The personnel and expertise that is necessary to efficiently and smartly operate a RC, and manage profitable investment projects
More than this, though, a regional center has to fit your own personal goals and interests. It has to help you achieve the end-goal of legal permanent U.S. residence, but in a way that is comfortable and workable for you. It must meet your reasonable expectations for return on that investment. Going a step further, your choice in a regional center should satisfy your own personal standards, and be as perfect a fit as you can achieve given the options available to you. When you have accomplished that, you have really put your money to work for you.
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Tags: America, eb-5, green card, Immigration, investment, regional center, u.s. residence, uscis, visa
Posted in Immigration | No Comments » |
April 20th, 2009 |
Answer: Use a consultant. That may be a simplified answer so let’s look at this in a little more depth.
A consultant is a person who delivers objective, hard-hitting advice; that advice will sometimes validate the client’s (your) suspicions or existing perceptions, or it will dig out and bring to the surface problems or issues that the client was not fully aware of, or, in some cases, was unwilling to face.
In some ways, this can sound a harsh description of what a consultant is, and what a consultant does. After all, given a choice, not many of us would opt to have someone make us face issues that we’d rather pretend did not exist. But with half to a full million dollars or more on the line, isn’t it worth a little disillusionment or discomfort?
Realistically, though, there is no reason that working with a immigration consultant needs to be an uncomfortable experience—even if some of your perceptions need to be corrected in the process. It all comes down to what your consultant has as his or her motivation; and that motivation in this case, as we know, is to protect your rights and to ensure that you make the best possible decisions for the best possible outcome while achieving your goal of relocating to the United States as a permanent resident.
If at times it seems that you consultant is making life difficult by forcing you to face facts and make difficult decisions, always remember that that is his job, and that everything he does, he does with your best interests foremost in his thoughts. When you can remember that everything that is done is done only to better your experience, it becomes far easier to appreciate and swallow what is given to you.
To get back to answering the question at hand, a consultant is essentially someone who is paid to look out for your best interests. Really, their function goes far beyond that—your consultant is also a researcher, investigator, representative, resource, industry expert, and much, much more. For all the things that your consultant is, the one thing that you can always rely on is that their expertise is working specifically for you—not for the regional center or some other entity. You consultant is the one person throughout the entire process that is working expressly for you.
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Tags: immigrant investor, immigration consultant, permanent resident, regional center, united states
Posted in Immigration | No Comments » |
April 16th, 2009 |
The location of the regional center and the center’s proposed projects is often (mistakenly) thought to be irrelevant to EB-5 regional center investors. It’s easy to make that assumption, because unlike the standalone investment investing in a regional center means that you have the freedom to live anywhere in the United States, as far away or as close to your investment project as you like. Regardless of where you have your heart set on living, the location of a regional center and its projects does still have a definite impact potential on your investment and visa success. There are a couple of reasons why this is true.
First of all, the location of the center, and more specifically the particular project that you are investing in, matters because the amount of your required qualifying investment depends on that location. We’ve discussed this before as you’ll recall, your minimum investment will be either $500,000 or $1 million depending on the location of the project. The lower figure applies only to Targeted Employment Areas and designated rural geographic regions.
It is imperative to make a distinction between the location of the regional center and the location of the project itself. It is entirely possible that projects within a given regional center will have different investment minimums depending on where the money is actually invested. You cannot assume that just because a center’s offices are located in an area that meets lower-level investment minimums that the project funds will be invested there. You can also not assume that just because the last project was invested in a TEA or rural area that the next project will take place in a similarly qualifying area. The investment minimum for visa approval could vary quite easily from one project to the next.
These are the most basic reasons to consider the location of a project, but there are reasons that go deeper. These are the more in-depth considerations that an impartial advisor will research to determine how they apply to your situation. Let’s expand on that.
A regional center can be greatly influenced by their location and the location of their investments. There are many tangible and intangible influences of the region where your center operates that may come into play. Factors like business climate, property markets, workforce, local and state support of the project, and the presence or absence of worthwhile investment recipients can all make or break a project that sounds very good on paper. Add to this the more fluid factors like public perception of the center, its projects, and even immigration and the EB5 program itself, and suddenly something that looks very good as a business plan can be much more tenuous as a dual-purpose investment and immigration vehicle.
Another very important consideration is the proposed exit strategy for the project. The location of a center can have a tremendous impact when it comes time to try to exit your investment at a profit. This is one of the areas that centers often gloss over. Your impartial advisor, however, will not take them at their words, and will explore and discuss with you all the potential impacts of location for both now and the future.
Often the only way to know how a regional center’s location may impact upon its investments and investors is to take a lot of time getting to know the region, its potential, and its personality “quirks”. Actually physically visiting these regions is the only way to get to know the pros and cons of the particular area, and to know what other factors need to be looked into further. Taking that time can bring critical issues to light that would not come up through paper research. This is one area where impartial advisers can prove their particular worth, because as we’ve already established there is no possible way for a single investor to undertake this kind of travel and physically present due diligence on his or her own.
The next blog will take a look at the best way to choose where to invest, who to trust.
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Tags: Add new tag, eb-5, eb5, exit strategy, Immigration, investment, regional center, targeted employment areas, TEA, united states, uscis, visa
Posted in Immigration | No Comments » |
April 14th, 2009 |
Regional center track records are one of the first forms of comparison that help investors choose between various investment possibilities. Early on in the EB-5 program, that was almost enough to compare center to center and come up with the best investment. As there were only a handful of approved centers, comparisons were fairly straightforward. That situation has changed dramatically in recent years. With more than 30 approved centers and more being added to the list on a regular basis, it is much harder for immigrants to compare all the centers, to understand the diversity of information and statistics that are found, and to be able to confidently choose which center is best for their needs. Add to that the facts we discussed before—the fact that the centers should not be your one and only reliable source of research and information—and what you have is an unmanageable situation for the average immigrant investor.
In addition to this, and this is a very important fact to highlight and always remember, there can be quite a lot of differentiation even within an established and trusted regional center. A good track record with a specific or past project may not be a guarantee of the investment and visa potential of the next planned project. For this reason it is always necessary to evaluate not only the overall and long-term track record of the center, but also the track record of each project in conjunction with an in-depth analysis of the proposed projects that are being offered by the center at the current time.
It is also critical to know that designation or approval as a regional center by the USCIS does not mean that all projects and petitions emanating from that center will automatically be approved. Each project that the center undertakes is evaluated individually, as are all petitions and applications. It is true that designation as a regional center is a more secure avenue of investment for immigration, but this is only a threshold requirement—the project and the petition still need to prove their worth beyond doubt to the USCIS.
The track record of a regional center, while not a guarantee of individual approval, is a strong indicator of what the center and its management are capable of achieving. It indicates whether or not the program and its principals have the “know how” to develop strong investment programs that will qualify as immigration investments and get approved by the USCIS, and whether or not the individual investor’s petitions will be approved, both at the I-526 Stage for Conditional Permanent Residence and at the I-829 stage for Removal of Conditions.
That being said, track record alone is still not enough for you to commit to any regional center. The project that you are considering investing in also needs to be thoroughly evaluated on its own merits. Success with a past project is a good start, but in conjunction with this you need professional advice to determine the potential viability of the project that you will be investing in.
To add yet another contributing factor to the mix, all the recently launched centers and new projects must also be evaluated and considered. It takes an even higher level of care, research, and due diligence to evaluate the potential of a brand-new project where there is little or no record of success to fall back on. In order to consider a new center and/or project on your regional center “short list”, it must be thoroughly researched in conjunction with economic forecasts and business plans in order to determine its potential viability.
Contact Andrew Bartlett or Stephen Parnell for additional in-depth analysis of any potential regional center you are considering.
In the next blog we will look at the geographic location of a regional center and what they may mean to you as a potential investor.
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Tags: andrew bartlett, eb-5, I-526, I-829, immigrant petition, regional center, removal of conditions, stephen parnell, uscis
Posted in Immigration | No Comments » |
April 13th, 2009 |
Following our overview from last week we will today look at the practice of some regional centers requiring their investors to use a designated attorney to file the I-526 petition.
In general we do not favor this practice. Our position is that you should have as much independent advice as possible, this would include an attorney independent of any regional center, an accountant and a business legal advisor. Think about buying a house; would you want to use the same legal representative as the seller or have your own? The provision of experience always needs to be taken into consideration though particularly in something as complex as the filing of an I-526 petition for an alien investor in a regional center case.
In no way are we casting aspersions on attorneys who work with specific regional centers; it is entirely possible that they made the list of approval because they are known for their high ethics, experiance and impartiality. The only point is that this is a practice that could be positive or negative, and largely that will depend on the policies, practices, and code of ethics of the chosen regional center.
You will want to talk with your advisor to decide the implications that may apply to you.
Tomorrow we will look at how relatively new regional centers compare to those with an established record.
As usual, please contact us with any questions or comments via this blog, our websiteor Skype.
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Tags: alien investor, attorney, code of ethics, eb-5, I-526, regional center
Posted in Immigration | No Comments » |
April 10th, 2009 |
Exit strategy; perhaps the second most important consideration for an immigrant investor asking the question which eb5 regional center should I choose.
If you follow our ramblings on this blog and the information on our website WhichEB5 you will already know that after a specified time period, typically five or six years, you may be eligible to divest yourself of the investment you made in a regional center in order to get your green card. The most important words above are “you may be eligible”.
As many regional center options as there are now it looks as though we have just as many exit clauses or ways to get out of your investment.
We are assuming, for the purpose of this discussion, that you want to get your funds back. Of course, if the regional center is paying you a handsome dividend you may want to take advantage of that long past the time you could get your money back. With most of these investments that will likely not be the case.
So what are the options? As we said, there are many. Some regional centers have a clear and definitive idea of how the limited partnership (this is the typical business structure of a regional center) will be dissolved. Clear and definitive is good. It is important however to make sure that the plan for dissolution is sound from a business perspective and not simply designed to look good on paper.
Some centers might state that the limited partners (insert “you” in there) CAN sell their holding to a willing buyer. This is where it can get tricky. Let’s look at one possible scenario; Imaging you are a fractional (i.e. 1/20, 1/100 or whatever the total number of partners/investors are) and you want to sell. How many other people in the same investment partnership agree with you? What if they don’t? Would you be able to sell your fractional share if none, or a limited number of others, do?
Are you starting to see some of the elements of a slightly difficult (I’m being kind with the choice of words here) situation?
As I’ve said before, this is not a simple decision and one regional center may or may not be better, in your eyes, than another. It comes down to having all the facts carefully explained and you fully understanding all the elements that go into a successful EB-5 regional center investment.
Remember: Job creation first, exit strategy second.
Next week we’ll take a look at four more considerations in your choice of a suitable regional center investment.
As always, we welcome your comments and questions.
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Tags: eb5, green card, immigrant investor, regional center, Which EB-5
Posted in Immigration | No Comments » |
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