Every project has its own terms. It is important to analyze all of the project''s terms, including profit sharing, responsibilities, additional benefits and any other terms the project has set forth. It is always important to conduct due diligence whilst keeping your immigration goal in mind.
Absolutely you should look for more than a visa from your investment. Inquire about expected rate of annual return, look at their past history, and ask about any exit strategy after the project is developed.
Because most regional center affiliated projects require that the EB-5 funds be held in business for only four, five or six years, there is not much profit derived from the business. You will be lucky to receive 1-3% of return from your investment. On the other hand, if the project is not timely completed as planned in the regional center''s business plan and partnership agreement or operating agreement, you may not even get all of your $500,000 back by the time you get your I-829 approvals. However, if you are confident in running the business yourself, you can apply for EB-5 immigration benefits yourself without affiliating with a regional center. In this case, you can control how much profit you will get back from your own business.
Every project has its own terms and conditions which will be outlined in the various offering documents which you should carefully review and when necessary consult with a corporate securities attorney or business consultant to assist in the review.
You are investing in a business opportunity, so the idea is that you will be getting a ROI. What you get is contingent upon the offering, so read the offering closely. If you get nothing but the green card you may want to consider another opportunity.
An EB-5 investor can invest their funds in an EB-5 Regional Center project in which the funds are loaned to the project or the investment funds can be invested directly into the project company. The direct investment in the new commercial enterprise which is also the job creating entity will allow a return on the investment and hence profits. In a loan model, the job creating entity is only paying a small interest on the loan repayment to the new commercial enterprise which give very little return to the EB-5 investor in the new commercial enterprise.
It all depends on what your contract with the company you invest in says. There are companies that EB-5 investors invest in that provide competitive dividends and profit sharing. Most will be from standalone (non-Regional Center companies) companies.
Whether an investor can receive any return on his/her investment depends on the specific project. According to my knowledge, some regional centers do share profits/dividends with the investors while the others do not.
The answer to your questions depends upon how the investment is structured. For regional centers, EB-5 projects are usually structured as either loan models or equity models. Actually, they both are equity investments, but the ultimate use of the funds could be different. Also, depending upon the agreements you sign with the regional center and/or project developers, you may receive a specified share of the profits. Just like in any real investment, however, there is no guarantee of any profit or any return of principal. If you are investing in a direct/basic investment, then you get to keep all of the profit, or a share of the profit (if you are in a pooled investment or have other partners). In other words, it is open to negotiation and it depends upon various factors such as the language of the agreements and the success or lack thereof with respect to the investment strategy and business plan. There are no immigration laws or regulations regarding how profit is distributed among investors.
EB-5 investors usually receive a return on their investment. For standalone, direct investment projects where the EB-5 investor is also a manager, any return would be profit or income from the operation of the business enterprise.
Where an investor invests in his/her own business, he/she can make as much return on investment as the business can generate. For projects not primarily managed by the investor, the return on investment is determined by the agreement the investor has with the issuer of the securities and of course also on the performance of the project. The law requires only that the investment be at risk during the visa process. The law does not require any level of return on investment. Returns on syndicated projects where investors are limited partners in an enterprise primarily managed by others tend to be small (1-2%/year) and frequently are not enough over the life of the investment to offset the administration fee that is charged to investors up front. The returns are small because the attractiveness of EB-5 for projects depends on a substantially lower cost of capital. If the return to investors were not substantially lower in an EB-5 program than other financing programs, the project developer/manager would have no incentive to incur the costs, delays and potential legal liability associated with EB-5 financing.
It leads to permanent residence for you, as well as your spouse, and unmarried children under 21 years of age. After your conditions on your residence are removed, you can seek citizenship after being a resident for 5 years. Otherwise, each EB-5 investment is different and you should consider each one separately for the potential value and profit. Some EB-5 projects (if you do not directly manage them) are pooled investment structures. You also can choose to open your own U.S. company based on your investment and creation of jobs for 10 new U.S. lawful workers.
The return on the investment will depend on the EB-5 Regional Center, New Commercial Enterprise, and EB-5 Project. Whether a loan model or equity model is used may also affect the return. Using an EB-5 attorney, like those at our law firm, to coordinate with a Regional Center or Project can help an investor create a successful U.S. Immigration strategy.
The benefits in order of priority (at least usually) for the investor are as follows a) permanent green card for the investor (and family if the members qualify); b) return of investment at the end of the loan/investment term; c) interest on the investment. Certainly receiving a return on investment will help in marketing the project but the rates vary by project. It can be anywhere from .5%/year to as high as 4-5%/year. The remainder of the profits can be spread across to the other players in the deal. If this is a direct EB-5 investment, then there are usually not many parties involved; however, if this is a regional center deal, then the regional center could benefit from the profits.
Neville M Leslie
It leads to citizenship and typically a small return on the investment.