EB5 Challenges and benefits facing Latin American EB-5 investors - EB5Investors.com

Challenges and benefits facing Latin American EB-5 investors

Victor A Espinosa

By Victor Espinosa and Marcelo Gorenstein

In an ever-increasing interconnected global economy, the EB-5 Immigrant Investor Program has emerged as a compelling avenue for Latin American investors seeking to seize the promise of the American dream. Each investor’s situation is different, whether they are from Mexico, Peru, Colombia, Brazil, and Argentina, however, there are various trends and commonalities that lead to motivating drivers for them to make a decision to move forward with an investment into the EB-5 program. The EB-5 visa program offers individuals and their families a unique opportunity to secure permanent residency in the United States by making investments that create U.S. jobs and stimulate economic growth.  

For Latin American investors, the EB-5 program presents challenges but also priceless benefits, such as granting access to the world’s largest economy, a top-tier education system, and unlimited career paths and development. With over 80 percent of applicants approved each year, the application and investment are only the first steps of a nuanced EB-5 visa journey for investors. Let’s discuss some common trends, invaluable benefits, and inevitable challenges that can emerge for Latin American investors. 

How people from Latin America can benefit from the EB-5 visa

First, there are those driven by the desire to secure and diversify their assets in the U.S. and additionally provide their children with better opportunities: an enhanced education, superior healthcare, and a safer, brighter future. Frequently, a family will gift the capital needed for the investment to their child who is planning on studying in the U.S. so that they can work without sponsorship or restrictions and travel as they please.   

Second, a growing number of applicants from Latin America are entrepreneurs and business leaders, often owning significant family businesses. These investors are concerned by political and economic uncertainties in their home country. They view the EB-5 program as a route to safeguard their assets and potentially expand their enterprises. Many investors choose to sell their local business interests and assets and move to the United States. Not interested in the restrictions of start-up or E-2 visas or having difficulty with intracompany L-1 transfers, they choose EB-5 to give themselves and their families full residency and working rights. 

The third type of common applicants are individuals who have already dipped their toes into the American lifestyle, either through frequent business travels, temporary work or study visas. Recognizing the quality of life and investment opportunities, they have frequently already invested in real estate and now want to spend more time in the U.S. Many times, they are tired of having to count their days in the country and constantly exit to maintain their tourist (B-1) or visiting business (B-2) visas. They make the decision to continue building on what they have in the U.S. and use the EB-5 visa to transition from being a temporary to a permanent resident.  

The value of an EB-5 investment beyond its monetary returns

The most sought after benefits of the EB-5 visa for Latin American investors are indicative of the evolving socio-economic landscape and shifting priorities within the region.  

As political and social unrest continue to grip several Latin American countries, the EB-5 program has a clear benefit:  it does not require employer sponsorship and does not require existing families to be in the United States. Even before families decide to significantly sell assets, the EB-5 visa can provide an option, a vital Plan B, as they diversify their wealth across jurisdictions with an aim to reduce risk.   

Another trend that has emerged for those looking to propel their future generations forward is the strategic fusion of financial planning and family legacy. Latin American investors are increasingly recognizing the value of an EB-5 investment beyond its monetary returns. By leaving a legacy of financial security but also expanded opportunities across borders. Families look to establish a lasting family asset that transcends across generations.  

For investors focused on business interests, many are realizing that the green card itself is the greatest return. With it, investors can access exclusive funds offering higher monetary returns and greater financial opportunities for U.S. persons. Additionally, access to the U.S. credit market. This fact underscores the EB-5’s appeal as a multifaceted opportunity for investors, especially those looking for high-yield ventures. 

Also, investors who make a decision to invest in the EB-5 program are taking advantage of asset class diversification in their investment portfolio and implementing a holistic strategy for wealth preservation. As an investment in EB-5 is made, we see parallel investments made in real estate acquisitions in prime locations like Florida and Texas, which have become a favorite for Latin American investors looking to broaden their assets and open the door to the U.S. 

Challenges for Latin American EB-5 investors 

While the EB-5 visa program offers a wealth of opportunities for investors, it also presents a host of manageable challenges. Financially speaking, even the wealthiest of applicants can face difficulties if they don’t take time to plan for their finances beforehand. 

Foreign exchange rates: One of the foremost hurdles stems from unpredictable fluctuations in foreign exchange rates. The deflation of local currencies against the U.S. dollar can significantly impact the affordability of the EB-5’s required investment.  

Asset liquidity: Liquidity can be of concern for families who might possess substantial illiquid assets but struggle to liquidate them in order to meet the investment threshold. In such cases, exploring loan options might offer a viable solution, allowing investors to bridge the gap between available assets and the required investment amount. 

Cross-border taxation: Once the EB-5 visa is approved and a conditional green card is granted, investors become U.S. taxpayers. To be prepared for compliance with dual taxation systems, investors often turn to cross border CPAs and tax attorneys who understand the intricacies of both U.S. and home country tax laws. 

Source of funds: Securing the documentation to establish the lawful Source of Funds(SOF) is yet another hurdle faced by EB-5 investors. While these investors possess the necessary funds, the challenge lies in assembling the proper documentation to satisfy the stringent requirements. 

Beyond financial hurdles, there are a few other challenges that can be difficult for EB-5 applicants to initially overcome. Primarily, linguistic and cultural differences are to be expected, and it can take time for investors from any country to fully adapt.  

Lastly, Latin American investors specifically are often characterized by a lengthy decision-making process, which contrasts with the urgency displayed by some other nationalities. This longer deliberation period can extend the timeline for their EB-5 application, demanding careful management to ensure alignment with program requirements and evolving circumstances. 

Reaching the American Dream through the EB-5 visa

In embarking on the exciting journey of the EB-5 visa program, Latin American investors should remember that the investment is just the beginning. Challenges will inevitably arise, so strategic guidance can be a lifesaver in simplifying the process. It’s essential to partner with companies that offer financial expertise, cultural understanding, and personal support to navigate these challenges seamlessly. 

With the right guidance, these challenges become opportunities to achieve U.S. residency and financial growth, paving the way for a bright future in the United States.

Victor A. Espinosa

Victor Espinosa is a senior director and is responsible for leading the firm’s business development and capital-raising efforts in the Americas. Espinosa comes to LCR Capital Partners with over a decade of experience working in finance, private wealth management and EB-5 – from private firms to large, multinational institutions. He has extensive experience building and developing client relationships and implementing strategic financial plans.

Marcelo Gorenstein

Marcelo Gorenstein is a vice president, Brazil and is responsible for leading business development, channel management and capital-raising activities in the country. He also led the firm’s European residency by investment program and was a key player in structuring LCR’s Portugal Golden Visa offerings. As a first-generation American growing up in an immigrant family, Gorenstein finds a purpose in helping others discover their unique place in the world. He is fluent in Spanish and Portuguese and works across the Americas markets, cultivating strategic partnerships and guiding investors when they look to take a second residency.

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