The quest for American citizenship is sort of a spiritual pilgrimage to the promised land, especially viewed through the eyes of an educated Indian who immigrated in the last decade. Holding that coveted passport opens many proverbial doors, doors with the promise of unlimited refills. For someone born in Asia, the journey often involves a unique set of challenges, deeply rooted in bureaucracy and prolonged uncertainty.

As such, EB-5 emerges as a tantalizing alternative with a simple capitalistic idea at its core — $$$ in exchange for a green-card. Over the 8 years we’ve lived in the States, we’ve heard anecdotal stories about this golden visa and we decided it was time to meet a few EB-5 consultants to clear the air and bust myths. Here are my take-aways from our discussions.

Prompt: Millennial brown couple working in US as software engineers chasing the US dream in Memphis style.

Investment

  • To apply for an EB-5 visa, you need to invest with a regional center. A regional center is defined by USCIS as:

Economic unit, public or private, in the United States, involved with promoting economic growth.

  • An investment of $500K was acceptable around 2018, nowadays, you need close to a total of $900K to $1M (includes lawyer, administrative fees). There’s a new Reform and Immigration Act (RIA) passed a few years back which re-authorizes regional EB-5 centers. Under this new regulation, you need to invest at least $800K (excluding fees) if you have a rural or infrastructure based investment. If you’d like to invest in commercial projects, then the number goes up to $1M (excluding fees). There’s another EB-5 route of setting up your own business and creating jobs - which is the rather rarer. We’ll focus on the passive investing program for the purposes of this post.

  • On top of this core investment, most regional centers will charge an admin fee ($60-$80K). You can negotiate these admin fees, but usually that’s a sign that the regional center is desperate. There’s also lawyer and government fees which can add up to $30-$40K. In sum, you’re looking at $800K core investment and at least $100K in terms of various fees and expenses, with everything rounding up to ~$900K to $1M.

  • Lump-Sum vs. Installments: Some regional centers are taking cognizant of the fact that it’s taking time for the I-526 (EB-5 application form) to get approved, and so they provide an option to pay the investment amount in chunks, normally over a 1-2 year schedule. The consultant was unsure whether government approved rural projects will accept installments.

Sourcing

  • The most complicated aspect of the application is generally the source of funds. In principle, there’s no restriction on how you get the cash together, except for the fact that you need to prove the source of the money is legitimate. You can source money through loans and gifts from friends / family as well. When you get a loan, you need to provide some collateral, and you need to make sure the collateral lives up to the government scrutiny. When the source of a fund is family or relative, they still have to show that the money was accumulated legally; through proper bank statements, tax documents, property documents etc

  • When it’s a loan, it’s typically complicated since it depends on the quality of your backing documents. The lawyer will help you figure out the documents you need to prove the authenticity of the funds.

Sourcing and Picking Projects

  • Plenty of lawyers are associated with regional centers behind the scenes. The consultant suggests identifying regional centers that have worked for folks in your circle. On occasions, regional centers will provide references to others who went through the whole process.

  • EB-5 investment has similarities with P.E. / VC firms; these firms back a project by taking a look at the idea, execution history, and use their knowledge of the industry. They know it’s a big, risky proposition, and eventually it comes down to: do the people behind the project have a good track record? You should meet the folks behind the regional centers multiple times, examine their business plans with a Wealth Manager, do your due diligence and learn more about their business and come up with an assessment. Always pay one of these wealth managers.

  • Few popular project bets include elder Care Facilities in rural Florida, resorts and condominiums in metro cities.

  • The elder care facility for e.g., is based on a federal program which incentivizes completing the construction. Since the elder care facility will be built in a rural area, the investment will be lesser (as compared to a commercial project) and you’ll enjoy quicker I-526 processing time. On the flip side, there are commercial projects in California that’ll give you a 1% return on the top of the money you invest. You need to deeply understand why they’re giving a return vs. other developers who are not. There are thousands of registered regional centers - many with a few projects under their belt, some with none.

Timeline

  • With rural projects that have already received government approval, you’ll get conditional green-card (EAD) within 6–8 months. After 2 years, the project will provide with job-creation stats, after you apply for I-829 (application for permanent green card). There’s 1-2 year delay in I-829 application processing; so you might need to wait 4–5 years in total.

  • There are competing narratives when it comes to EB5 retrogression. Prior to the passing of the RIA act, EB-5 priority dates did actually retrogress for Indian citizens. With RIA, if you have legitimate visa status in US, you can concurrently file a I-485 with the EB-5 (I-526) application. Irrespective of whether we are waiting either due to processing delays or due to visa delays for the I-526, USCIS provides you with an EAD card which is unrestricted till your final disposition of the EB-5 application.

  • There are some concerns about a provision on the government website which states that EAD cards can only be processed if your date is current (but our consultant hasn’t heard this to be true). With an EAD card, you’re protected from layoffs since your job is not tied with your visa. However, there’s the risk that once your EB-5 application gets rejected, and since your H1B has gone out of the window since you filed an I-485 petition, you are left without any status.

  • The difference between conditional and permanent green card is the expiry date; conditional expires within 2 years, but you can auto-renew if your I-829 is filed.

Job Creation

  • Most of the projects need to provide business plans that show that they need to create ~10 jobs. There are two kinds of job creation: direct and indirect regional jobs. Indirect jobs are based on regional modeling, and the regional center does not need to provide payroll documentation for these jobs. Indirect jobs are assumed created as long as the money is invested, and the business plan is executed successfully.

  • For direct jobs, the regional center provides payroll evidence for the 2-year period, which gets submitted along with your I-829. Most projects sometimes have “spare” indirect jobs, and as such 10 jobs is an estimate. The risk for refusal at the tail-end of the project is not zero, but not as high as risk upfront (project approval).

  • The difficulty with getting EB-5 investment spots in rural projects is that they fill up right away, since rural projects are high-demand. Rural projects can accommodate 40 investors; out of which 10 might be EB-5 spots; those spots fill up right away.

Risk

Summarizing all the risk from the conversation; in no particular order:

  • The EB-5 investment is an “at-risk” investment. Regional centers tend to provide sureties through business plans and share a timeline on how and when you’ll get your money back. However, they’re not allowed to securely say that you will be guaranteed your money back. Guaranteeing jeopardizes your EB-5 application, as it’s not an “at-risk” investment anymore.

  • Keep in mind that EB-5 immigration and financial benefits don’t go hand in hand. There’s a chance that if you invest your money in a bad project, your EB-5 petition will get refused, and you’ll still not get your money back. Getting your money back is a prerogative of the project stakeholders but getting you a visa is a prerogative of the government. Immigration is never a risk-free process; but the question we should be asking is what can we do to increase our odds? You need to come to a decision that the project you’re investing in is sound; the regional center backing it is trustworthy and even if the economy goes bad, there’s still a chance that you’ll get my money back.

  • There’s a risk with your I-829 that the job creation data provided by the regional center is rejected by the government, which will automatically nullify your EB-5 application.

  • If you choose to invest in a project that’s not approved by the government, and the government subsequently rejects the proposal; all the investors included in the I-526 get rejected. You ideally look for business plans / projects that have succeeded in the past.

  • If you go the installment route and your installment isn’t paid, your application will automatically get refused. If you submit your I-485 (adjustment of status), you’ve given up your H1-B - which adds additional risk. Avoid partial payments if you can. Either you’re chasing the immigration benefit or the financial benefit; if you try to chase both goals, take the risk with your eyes wide open.

  • You also need to meet the criteria for an SEC accredited investor - either need to have a million dollar net-worth or $300K in joint-income. If you do not meet that requirement, you are not eligible to invest in EB-5. Technically, we can overcome this if you’re getting money as a gift; if you can accumulate $1M before the process kicks off, we should be good.

  • Based on other accounts, you tend to lose $300K in opportunity costs with an EB-5 application.

Endnotes

With an EB-5, you’re gambling not just on a long wait or the visa merry-go-round but also kissing goodbye to a cool $300K in opportunity costs. And for what? A green card that’s playing hard to get. Between you and me, we don’t want it that badly.