Questions and Answers > EB-5 Investments

How can I use a mixed-use development for EB-5?

How can I use a mixed-use real estate development for EB-5, and make sure it''s considered at risk, even when the investors are guaranteed a home in the development? For example, a mixed-use project is developed with commercial space to be leased out to various business and residential home sites to be build out by one or more builders. As part of the investment, and in addition to any return on the investment, the investors would receive a home and lot in the newly developed community. Let''s say the home is worth $250,000. Would the amount of the $1 million at risk be reduced to $750,000, thereby disqualifying the investor from the EB-5 program? What can I do to ensure this doesn''t happen?

Answers

• Reza Rahbaran

  Immigration Attorney

  Answered on May 14, 2014

  Please note direct investors are required to be involved in the day-to-day operations of the project. Also, if the investor is guaranteed ownership (house and lot) in consideration of the investment, the present value of the guaranteed ownership ($250,000) does not count toward the total amount of the investment. It may be best to present the project to an established regional center in order to reduce investment threshold to $500,000, provided that the project is within a TEA. Regional center projects allow minimal participation to investors.

• Salvatore Picataggio

  Immigration Attorney

  Answered on February 10, 2014

  Any guarantee of funds returning to the investor reduces the amount "at risk." It should follow that providing an asset (like a home) would also reduce the "at risk" amount. However, other incentives to investors may be permissible, but you would definitely need the assistance of an EB-5 attorney to review the law and policies.

• A Olusanjo Omoniyi

  Immigration Attorney

  Answered on February 10, 2014

  Based on your set of facts, an EB-5 visa approval is unlikely for a host of reasons. First, you cannot guarantee the investors a home and lot in the development that is part of the EB-5 real estate development. All EB-5 investment funds are supposed to be "at risk" investments. In this instance, you seem to be guaranteeing the investors funds. Second, it appears in your area of operation, which obviously is an urban area, each investor is supposed to invest a minimum of $1 million. This figure cannot be reduced, and each investor must invest $1 million. Finally, guaranteeing a home of about $250,000 and lot in the community will significantly reduce the required amount of capital investment. In actuality, you are guaranteeing more than just $250k, as the lot is unquantifiable. Advisably, additional information needs to be provided, and consulting an EB-5 immigration attorney is highly recommended before proceeding any further with your EB-5 plan.

• Lei Jiang

  Immigration Attorney

  Answered on February 10, 2014

  It''s still at risk. In your example, the home is worth $250,000 now, but could be worth much less in the future. But, if your project requires $1 million, you will have hard time finding investors.

• Philip H Teplen

  Immigration Attorney

  Answered on February 10, 2014

  Not necessarily, but it depends how it is written. Even a home is at market risk; although, it could somewhat reduce the risk money. You need to review the plan with an expert.

• Rohit Kapuria

  Immigration Attorney

  Answered on February 7, 2014

  The home guarantee falls short of the at-risk requirement. It would not work for EB-5 purposes. I''m happy to offer you a complimentary consult to further discuss.

• Fredrick W Voigtmann

  Immigration Attorney

  Answered on February 7, 2014

  You cannot guarantee any return or give them a home in exchange for their "investment." Either it will not be considered "at risk," or the value of the home will be deducted from the investment amount. You just can''t make this work for EB-5.