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How much profit can I expect from investing in an EB-5 project?

Can I expect to make a profit from investing in an EB-5 regional center project? What percentage can I expect as a typical rate of return? Is the regional center required to provide this information in the offering documents?

Answers

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    Fredrick W Voigtmann

    Immigration Attorney
    Answered on

    There is no guarantee of any profit, just as in any non-EB-5 investment or business venture. To qualify for EB-5, your invested capital must be at risk, which means it is subject to both gain and loss. Based upon financial projections, you might "expect" to receive a profit, but that is not guaranteed, and it will depend upon how successful the business operations are. A regional enter will provide investors with periodic updates and will, upon request, provide certain financial data for an investor to review.

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    Belma Chinchoy

    Immigration Attorney
    Answered on

    There is a chance you will make profit from an EB-5 investment, but I would set your expectations low. A project''s estimates of returns are just that - estimates and forward looking statements based on certain assumptions, which are generally not derived from past performance indicators but rather from market data and other projections. A project''s PPM is not required to state the projected rate of return; it is required to state that all statements regarding estimates of returns are based on forward looking statements and other assumptions. For several reasons, I generally advise my clients to de-prioritize profitability when evaluating EB-5 investment opportunities.

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    Salvatore Picataggio

    Immigration Attorney
    Answered on

    USCIS regulations actually require the investors to have an opportunity to gain on their investment, and also that the investment be at risk (so that there is a possibility that no gains are received). Typically, the investor rate of return is between one and five percent, but the amount of return will vary from project to project.

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    A Olusanjo Omoniyi

    Immigration Attorney
    Answered on

    Generally, investing in any EB-5 project carries the risk that you can lose your investment. As a result, do not expect that you will make a profit from any EB-5 investment, but rather, be on notice that you may lose your investment. Having said that, for a host of reasons your investment may however turn profitable. There is no typical rate of return. While regional centers are expected to disclose all information relating to their offerings, it will be hard to find any regional center which will guarantee a profit or even a typical rate of return. Caveat emptor (buyer beware), read the offering prospectus very well to know your rights and understand any EB-5 investment program before you proceed. Advisably, consult an EB-5 attorney before proceeding further.

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    John J Downey

    Immigration Attorney
    Answered on

    Usually the percentage of return is decided between the investor and the project developer. The return is usually less than what a loan would be from a bank. It can be included in the documentation.

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    Oliver Huiyue Qiu

    Immigration Attorney
    Answered on

    Just like any investment, you should expect return or profits on your investment; EB-5 is no exception. The percentage is neither fixed or guaranteed, because USCIS could also interpret that as a sign of the investment not at risk. The actual rate of return varies from one regional center to another. On average, such return has been much much lower than what a commercial bank could get from similar financing arrangement.

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    Ed Beshara

    Immigration Attorney
    Answered on

    In regard to a return on your investment, every regional center project is different. In a loan model there is usually a low interest return. In an equity there can be a higher rate of return, but you will have to review the offering documents.

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    Kenneth C Wright

    Securities Attorney
    Answered on

    Since you are making an investment, you should expect a return. Market returns are often determined as expected risk free rate plus expected inflation plus riskiness of the investment (higher rate implies higher risk). EB-5 investments often add one more factor: value to investor of expected green card, so lower rate can still mean higher risk. In pooled and regional center affiliated programs returns to the investor are often fairly low. Regional center programs often have the investor make an equity investment into a special purpose private lender owned by the EB-5 investors and managed by an affiliate of the project developer (potential conflict of interest) or the regional center. The lender in turn makes a loan (often 5 year term with principal and interest payable at the end of the term) to a project developer somewhere in its capital stack. If the debt is placed in senior secured position, the rate will be pretty low, because it is relatively more secure. This debt is often instead placed at the mezzanine level. The rate is still relatively low (think lower range of mezz rates less a discount for the expected value of the green card). If you are an Accredited Investor under Rule 501(a) of Regulation D under the U.S. Securities Act, the Issuer of the proposed investment (which is normally a Security) is not required to provide you any information and is prohibited from providing misleading information or omissions. You are entitled to ask questions and request any information that is material to a reasonable person''s investment decision, if it can be provided to you without unreasonable effort or expense. Reputable issuers will provide an exempt offering memorandum that includes a business plan that will be required to be provided to USCIS. You should review this carefully and be able to get some idea of potential profits as well as the strength or riskiness of the project. However, EB-5 investments are by definition illiquid and at risk, so you should kick the tires with a healthy amount of skepticism. If you are not clearly able to understand the risks and merits on your own (and especially if English is not your native language), you should engage a qualified financial adviser, accountant or attorney to assist you prior to making your investment decision. The following links might be helpful as well: (http://www.uscis.gov/sites/default/files/USCIS/Outreach/Notes%20from%20Previous%20Engagements/2013/April%202013/ExecutiveSummary-EB5-040313.pdf) (http://www.uscis.gov/avoid-scams) (http://www.uscis.gov/news/alerts/investor-alert-investment-scams-exploit-immigrant-investor-program)

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    Jinhee Wilde

    Immigration Attorney
    Answered on

    EB-5 investment is required to be "at risk" so any language of guaranteed income/profit should not be in the documents. However, many regional centers that do the loan-based EB-5 projects have the loan agreement where the project developer promises to pay the limited partnership the interest payment for borrowing the loan. Then the general partner, often the regional center owner who administers the partnership, will pay their members 1 percent annum from that interest payment he/she receives.

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    Ian E Scott

    Immigration Attorney
    Answered on

    Most EB-5 investors invest in a regional center to get the green card rather than to generate a return. The standard maximum return (the investment cannot set a minimum return and the investor could lose all money) for well-established regional centers is 1 percent and the investment is usually held for 5 years. As the EB-5 investor will pay almost $50,000 in administrative fees the effective return to the investor is often negative. Those seeking a return often turn to the direct investment EB-5 program. There are regional centers/projects that offer returns of up to 5 percent but they are usually new ones without a track record.

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    Shahzad Q Qadri

    RC Creator
    Answered on

    The ROI varies, but one should not expect to make a huge amount through this investment. The offering documents should disclose the expected ROI.

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    Matthew Kolodziej

    Immigration Attorney
    Answered on

    Usually profits from EB-5 investments are modest, under 5 percent. However, you should expect to make a profit from the investment and do your due diligence by thoroughly researching the project, the regional center''s other projects, and the management team and their track record. They should make information available on the return on investment on their projects.

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    Anthony Korda

    Immigration Attorney
    Answered on

    The return on an EB-5 investment may depend on the type of investment (i.e. loan or equity) and will depend on the terms of the investment. The returns are likely to be modest and may range between 0-2 percent for a loan based project and a share of income (after expenses) for an equity based project. The offering documents should state what return is to be expected.

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