What are some of the investment risks associated with EB-5?

The EB-5 program offers significant advantages for obtaining a green card, but it’s crucial to understand the inherent investment risks. Here’s how to make informed choices and minimize those risks:

Choose the Right Partner:

• Experience matters: Choose projects that are being managed and represented by an experienced Regional Center with a track record of success. While most Regional Centers are quick to advertise their success on the immigration side, it is important to assess their track record of returning funds to investors. Many Regional Centers have not been around long enough to go through several EB-5 cycles of investment and repayment.

Focus on Project Completion:

• Prioritize Fully-Financed Projects: Choose projects with secured financing to complete construction. This increases the likelihood of job creation, which is essential for both your green card and potential future returns on your investment.

Beware of Expedited Processing Claims:

• Prioritize Project Fundamentals over Speed: Don’t be swayed solely by promises of faster processing. Whether based in a rural area or an urban area, a strong project foundation is critical for success.

Choosing the Right Project Matters:

• Compare Project Milestones: With the same investment amount, you could choose a project just starting out or one nearing completion with job creation already underway. The latter offers a significantly better chance of achieving your EB-5 goals.

By carefully evaluating these factors you can make informed investment decisions within the EB-5 program, increasing your chances of success.

Video Transcript
One of the easiest pieces of advice that we can give to investors is if you pick a project that’s fully financed, it has all the money to finish construction, then that project will be able to create all the jobs that are needed to give you and your family a green card, and really after that, repayments tied to the success of the project in the future. Another common investment or immigration mistake or risk that investors make is when there’s such a focus on picking projects that they believe have an expedited process or an expedited adjudication is that’s not always a good thing. I think you should work carefully with your law firm to understand why is it being expedited. Unless the fundamentals of the project are strong, you may be rushing yourself into a denial, for example. So please, when you choose an investment project, go through it carefully. So one thing that we tell investors is when you’re choosing an investment project what’s interesting is that you’re almost buying a stock, and you can buy a stock in any EB-5 project. The difference is the price of the EB-5 stock remains the same. So when you’re looking at these different projects available to you, think about where that project is in the process. There are some projects that have just barely started with maybe a rendering, maybe don’t even have enough money to begin construction. Whereas you with the same amount of money, the same $800,000, you can pick a project that has all the financing in place already, that has already started construction and probably even has all all the jobs available to you. That second project is a far superior project investment for you and your family. So these are the things that you should consider when choosing an EB-5 investment.

Presented by:
Phuong Le, Founding Partner, KLD