Although an EB-5 investor is not required to use a USCIS-approved regional center as an investment intermediary, most investors do. Although it is possible to establish your own regional center, most investors use already established third-party regional centers. Investing in a third-party regional center is attractive to investors whose primary purpose in seeking EB-5 status is immigration, not the investment itself.
Advantages of Selecting a Regional Center
The advantages of using a third-party regional center include:
- Your responsibilities for day-to-day management of the investment project is greatly reduced, although you will have voting rights on certain matters;
- You can count indirect jobs and induced jobs towards the USCIS requirement that your investment generates at least 10 full-time jobs;
- The regional center can help you with some of your immigration paperwork;
- Regional center investments tend to be safe, although rates of return are far from spectacular;
- Regional centers offer a wide variety of investment choices; and
- You don’t have to spend as much time setting up a business as you would if you established your own commercial enterprise.
Evaluating a Regional Center
Although all regional centers that offer EB-5 benefits have been approved by the USCIS (nearly 800 in total), not all regional centers are the same. In other words, some are better than others, and it pays to research a particular regional center before selecting it as your investment vehicle. Following are some of the most important considerations.
Termination
Make sure the regional center you are considering has not been terminated by the USCIS. The USCIS frequently terminates substandard regional centers.
I-829 Approval Rate
After filing Form I-526, you will receive a “green card” that is valid for only two years. If you wish to obtain true permanent residence, you will have to file Form I-829 two years later, and the USCIS will have to approve it.
The USCIS will evaluate the performance of your investment during those two years, particularly in terms of the number of jobs created, and it will approve or deny your I-829 application on that basis.
When making its decision, the USCIS will rely heavily on information provided by the regional center. It is for this reason that you need to find out the I-829 approval rate of the particular regional center you are considering investing in. If the rejection rate is high, the center may have a problem generating jobs through EB-5 investments.
Is the Regional Center Located in a TEA?
A TEA, or Targeted Employment Area, is a rural area or an area that has been designated by the government as an area of high unemployment. If you invest in a TEA, the minimum investment is only $900,000, only half of the $1.8 million required for investment outside of a TEA.
If you prefer to invest the lower amount, your regional center project will have to be located inside of a USCIS-designated TEA. Confirm this is the case before you invest.
Handling of Investment Funds
The regional center you select should offer a written guarantee that they will return your investment funds if the USCIS denies your I-526 petition, and they should place your investment in escrow pending USCIS approval of your I-526.
The USCIS will accept your investment as having already been made if it has been placed in an escrow account by a regional center.
Transparency
Every dime of your investment must be “at risk” for you to qualify for EB-5 status — which means that theoretically you could lose it all (most investors don’t). Even if your primary purpose in seeking EB-5 status is immigration rather than profits, you still don’t want to waste your money.
The regional center should explain clearly, using written documentation that is binding on the center:
- The details of how your money will be managed;
- Your legal obligations;
- Your financial obligations;
- The costs of administration; and
- All other expenses.
Have your immigration attorney check over this documentation before you invest.
Rate of Return (ROI)
Rates of return on investment in a regional center are typically low — sometimes as low as two or three percent per year, or even lower. Rates of return in TEA projects tend to be particularly low, due to the lack of vibrancy in the economies in which such projects are located. Compare regional centers with each other in terms of ROI.
