I have a question about a direct investment project. I, along with the EB-5 investor, own the new commercial enterprise. Can this new commercial enterprise pay rent to a real property also owned by the investor and/or myself? If not, can the business operate in that property without paying rent?
The new commercial enterprise may pay rent to real property owned wholly or in part by the investor on the condition that the investor did not use the property as investment capital in the new enterprise. The law requires that the EB-5 investment must be at risk. If the real property were used as capital in the new enterprise, paying rent may be deemed a guarantees of a return of the investment, which does not satisfy the requirement that the invested funds be at risk. Otherwise, the new commercial enterprise can operate in the real property and pay the rent. If the property is owned by an entity unrelated to the investor, the new commercial enterprise can pay rent as it would to any landlord, provided that rent does not guarantee success of the investment and, thus, remove the EB-5 investment risk. Likewise, if use of the real property without payment of rent were to guarantee success of the new enterprise, the risk requirement would not be satisfied.
The issue will be whether or not the full amount of the investor''s capital is at risk. If the NCE is going to use some of the investor''s funds to pay rent to the investor, then the answer is "no." All of the investment must be subject to both gain and loss, and no part of the principal may be returned to the investor before the condition is removed.
Land and rental income/expenditures may affect the job creation calculations. We work closely with experienced economists to review your EB-5 and business goals.
An EB-5 investor can own both the NCE and the premise that houses the NCE. Therefore, it is possible for the NCE to pay rent to the property owner, which is either the EB-5 investor as an individual, or more commonly a LLC set up for the specific purpose of collecting rent over that property.
I see no problem with USCIS as long as this is a standard business procedure. You may want to check with an accountant to see about tax implications.
The NCE can pay rent to the property owner - either you or the investor - as long as the money to buy the property is not from the $1 million or $500,000 investment fund.
There are a lot of missing components to your question. So long as the job-creating entity that is the NCE has the requisite amount of capital invested, paying rent to another entity that owns your real estate should not be a problem. However, we would advise you to talk to an attorney with your specifics.
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