+1-800-997-1228
Questions & Answers

What are the issues with residential real estate EB-5 projects?

I am considering investing half a million to qualify for a EB-5 visa for myself and family. I am considering an investment in a developer who will purchase land and construct 150 residential homes on the land over a two year period. I want to work with an attorney who has experience specifically with EB-5 applications for residential real estate projects and I want to know what are the issues that you've seen with such projects. Why aren't there many of these projects as opposed to hotel development?

Answers

  • Avatar

    Reza Rahbaran

    Immigration Attorney
    Answered on

    First, it must be determined that the real estate project will be in a targeted employment area to qualify for the reduced investment of $500,000. Second, the project must create 10 direct, full-time jobs sustainable for at least two years. Please consult an experienced EB-5 immigration attorney.

  • Avatar

    Salvatore Picataggio

    Immigration Attorney
    Answered on

    In a word: jobs. Hotels can count construction jobs and operations jobs, while residential development would probably only be able to count construction jobs. However, with the right EB-5 attorney, like our law firm, a project would be reviewed for approvability and compliance with the regulations.

  • Avatar

    Jeffrey E Campion

    Immigration Attorney
    Answered on

    Hello. This is a very complicated question. But, if the developer is relying on construction expenditure jobs for the job creation, there should be no issue. And, in fact, many of these projects are coming online.

  • Avatar

    Bernard P Wolfsdorf

    Immigration Attorney
    Answered on

    The Issue is almost always proof of job creation, and sometimes these projects have issues relating to guaranteed redemptions.

  • Avatar

    Philip H Teplen

    Immigration Attorney
    Answered on

    A residential realty project can work but if the investment is $500,000 it must either be recognized as a Regional center project or exist in a TEA. The hotel projects are more popular as it is easier to show the employment creation both directly and indirectly as well as the stability of investor take out upon refinancing.

  • Avatar

    Lynne Feldman

    Immigration Attorney
    Answered on

    The main issue will be whether enough full-time permanent jobs can be created. Also you can only do the $500,000 vs. $1 million if the project is located in a Targeted Employment Area.

  • Avatar

    Rohit Kapuria

    Immigration Attorney
    Answered on

    There is nothing wrong with residential real estate projects. While there are certainly more EB-5 hotel projects, some of the relevant reasons for the popularity relate to marketing, location, etc. In terms of relevant issues with residential projects, the largest concern job creation. Construction jobs are usually the path of job creation with real estate projects, be they hotels, hospitals, homes, etc. Given that construction will last at least two years and assuming the project is sponsored by a regional center, the Developer will be able to count direct, indirect and induced construction jobs. There will likely be little to no operations jobs unless the Developer is creating a community of sorts and will employ staff to rent/sell the homes. A critical issue would be ensuring that the Developer can support the two-year construction period which will allow him/her to count the direct construction jobs. Since it will involve construction of 150 homes, that may be possible. It is also important to understand that while EB-5 dollars can be used for the purchase of land, the land expenditure itself cannot be counted towards job creation. For example, if the total project costs $200 million and the land purchase is $50 million, only the "qualifying" expenditures associated with $150 million can be applied towards job creation. That being said, there may certainly be other issues to examine; however, without reviewing the project, I, of course, am unable to opine. My firm has worked on many residential projects and I will be happy to offer you a complimentary consultation.

  • Avatar

    Jin Lee

    Immigration Attorney
    Answered on

    For a non Regional Center EB-5 project, it is difficult to do residential construction because it does not create any direct jobs. For a Regional Center project, the indirect and induced jobs from the construction can be counted.

Add your comment

Use a Facebook account to add a comment, subject to Facebook's Terms of Service and Privacy Policy. Your Facebook name, photo & other personal information you make public on Facebook will appear with your comment.