The EB-5 Investor Visa Option

There is much serious real estate investment in the United States being made from abroad. For those foreign investors who are interested in immigrating, one of the best visa options available is known as the Employment Based Fifth Preference, or EB-5 visa. This visa permits qualified investors who meet a certain minimum threshold investment level to apply for admission to the United States.

There are two EB-5 programs from which to choose, the Regular Program and the Regional Center Program. The Regular Program has three basic requirements: (1) investment in a “new commercial enterprise” (2) of at least $1,000,000 (or $500,000 in certain cases, discussed below) (3) that results in the creation of at least 10 new full-time jobs. Additionally, the investor is required to take an active enough role in the business that he has at least a policy-making position.

The $1,000,000 Investor Visa

Traditionally, the EB-5 visa has been known as the “Million Dollar Investor Visa.” To qualify for this visa, an investor must contribute at least $1,000,000 in capital to the business in the form of cash, equipment, inventory, and other tangible property. Loans do not qualify unless they are secured by assets owned by the investor (not the business), who is personally and primarily liable for the debts.

The investment must also be in a “new commercial enterprise.”  Although the investor is free to invest in a company that was only very recently started or establish his own, any business formed after November 29, 1990 qualifies. Furthermore, the prospective immigrant may choose to invest in a business that has been substantially restructured since November 29, 1990, so long as that restructuring did not create a net loss of employment. Finally, businesses substantially expanded after November 29, 1990 qualify if their net worth or employment have increased by at least 40%. If the investor is concerned about the business reaching this 40% minimum requirement, he can include the capital contributed by other investors, even if they are already permanent residents or citizens.

The final requirement is the creation of 10 new full-time jobs for U.S. citizens or immigrant workers (not including the investor and his immediate family). These jobs must be directly created as a result of the investment. The only exception to this requirement is if the company is considered a “troubled business,” one experiencing a net loss for one or two years of more than 20% of its net worth.

Investors have two years of conditional residency in which to fulfill all the requirements. During this time, the $1,000,000 must be invested (and if part of this is in the form of a secured promissory note, it must be substantially complete). The ten jobs can also be created over the course of these two years. If at the end of two years the requirements are met, the conditions on permanent residency will be lifted.

The $500,000 Investor Visa

The Regular Program also includes a $500,000 investment option, although only investments in certain areas apply. The requirement to invest in a new commercial enterprise and the job-creation requirements are the same. However, the investment amount is greatly reduced and business must be in a “targeted employment area.”

There are two different qualifications for targeted employment areas. Investors can either choose to create jobs in a rural area, which can be anywhere outside of a city with a population of 20,000 or more or outside of a metropolitan statistical area, or they can invest in a business in an area with high unemployment (at least 150% the national average).

There are many benefits to choosing the $500,000 Regular Investment program that go beyond the reduced amount of investment necessary. One of these is that investors can band together. Immigrant investors can work with other immigrant investors, foreign investors not seeking immigration benefits, or U.S. citizens. As long as each immigrant investor contributes at least $500,000, they will qualify. Furthermore, if several investors band together, they can all use the same 10 employees to fulfill the job-creation requirement.

The Regional Center Program

In addition to the Regular Program, the Regional Center Program is available for investors who want more flexibility. Like the Regular Program, an investment of $500,000 will suffice. Citizenship and Immigration Services (CIS) approves programs in high unemployment areas if it determines they are likely to create many direct and indirect jobs, thus benefiting the regional economy

For real estate investors, this type of program is especially appealing. In one type of Regional Center program, a promoter forms a limited partnership program for investment in an industrial area, which is then converted into property with a higher value, such as office buildings or commercial properties. Partners must have a policy-making role in the business, but are not required to commit to the level of involvement in day-to-day business required by the Regular Program. This allows the investor to live anywhere in the United States he chooses, rather than being tied to his chosen location for investment.

Furthermore, the requirement to create ten new jobs can be shown by an economist’s report showing the likely creation of jobs in the region as a result of the Regional Center. This makes it much easier to fulfill the EB-5 requirements. The investor also gets a significant benefit from such a program. Because CIS will only approve a program if it is convinced it will create jobs, investors can look forward to returns on their investments, including collecting rent from tenants and profit resulting from property value appreciation once it is sold. Finally, CIS gives Regional Center EB-5 petitions priority, which often means they are approved more quickly than other applications.

Conclusion

Of the three varieties, the Regional Center Program is easily the most highly recommended for international real estate investors looking to obtain permanent residency quickly and without too much involvement in the daily running of a business. With the great deal of flexibility and the strong long-term track records of existing Regional Center Programs, they are a strong choice for the EB-5 eligible investor. Nevertheless, no matter which program is right for you, consulting qualified legal counsel will ease your transition and help smooth your quest for permanent residence. Roger Bernstein specializes in obtaining EB-5 investor visas and is available for consultation.