To EB-5 NOW or to Wait…THAT is the Question…
With September 30th only weeks away, prospective EB-5 investors worldwide are being bombarded online with a barrage of information regarding the future of the U.S. immigrant investor visa’s Regional Center program. In the case of Vietnam (where we will be next week), it’s gotten downright ugly, with new EB-5 projects in the country are basically fabricating lies in order to pressure people to invest.
The truth is that the decision to proceed with EB-5 NOW is not a formulaic one but, rather, one that each investor and family need to make carefully, understanding the risks and benefits associated with either pulling trigger NOW, before Sept. 30, or waiting. Online, the squeakiest wheels making the most noise about the Sept. 30 deadline include:
- Hard-sell EB-5 projects casting September 30th as EB-5 Doomsday in order to secure as many investors as possible before the U.S. government fiscal year ends on the 30th;
- Giant EB-5 megaprojects lobbying ferociously to repeat what they did last year, i.e., secure an extension of the current version of the law via a continuing resolution, perpetuating the abuse of TEA “gerrymandering”, i.e., manipulating U.S. census tracts in order to manufacture TEA-approved projects in very wealthy urban areas.
We at American Venture Solutions EB-5, of course, would LOVE to have qualified investors select one of our EB-5 projects over those of our competition. That being said, when you choose an EB-5 project, you are committing to a loooooong relationship! Whether you select a typical 5 year loan-based structure or an equity investment without a defined exit timeline (AVS EB-5 offers both, btw) you, as an EB-5 investor, are really entering into a business relationship with two parties:
- The job-creating enterprise which will (hopefully!) deploy your at-risk investment dollars, according to the specific, USCIS-approved business plan you’ve been promised and;
- The EB-5 Regional Center which is (hopefully!) doing all it can to protect the interest of the EB-5 investors entrusting the RC with selecting only the best, safest projects.
In light of that, our philosophy is that AVS, as an approved EB-5 Regional Center with a 100% record of investor approvals to date, ONLY want to have investors for whom our programs make solid sense; if not, we’d rather candidly tell the investor that it’s not right for him or her. At the end of the day, I’d rather make a friend than have a long-term relationship with an unhappy EB-5 investor. With that in mind, here’s what is really happening at this stage in the game and what YOU need to know to make the call on EB-5:
- Despite the cliffhanger scenario designed to pressure you to invest NOW, the reality is that the U.S. Congress – as in BOTH the House and Senate Judiciary Committees — have been actively working on the new law. While there is a lot of work to do before that law is in final form and it is extremely unlikely that this will be finished before Sept. 30th…the U.S. government runs out of money on that day! When that happens, a Continuing Resolution is passed which basically buys time until all the final details of the new laws, budgets, etc. can be hammered out between the House and Senate and ultimately be signed into law by the President. Accordingly, it is almost certain that the EB-5 Regional Center program will be temporarily extended in its current form along with all the other pending laws and budgets.
- Most folks I’ve spoken to – and, more importantly, some really smart folks who have researched this very carefully – agree that no increase in the 10,000 per year EB-5 cap (including investor and family members) is likely. What that means is that the China backlog is likely to continue to grow.
- The price of admission is almost certainly going to go up substantially from the current TEA-level investment of $500,000, but the often-mentioned $800,000 price is only one of several possibilities being debated in Congress.
- The big EB-5 megacenters – the giant developers who consume the overwhelming majority of EB-5 visas, primarily from China – are worried about two major problems: first and foremost, the increasing backlog for Chinese investors (who dominate EB-5 demand) means they will keep having to find investors to wait longer and longer for their EB-5. Secondly – and as my regular readers know, this is my pet peeve among the many EB-5 abuses out there – joint meetings between House and Senate committees have been held to address the scandalous redistricting of luxurious, prime real estate in major urban centers as TEAs via the manipulation of census tract data. The reality is that when Congress created the EB-5 way back in 1989-1990, the intention was to create jobs in legitimately poor and rural areas; I was a visa officer in Africa at the time and I’m pretty sure Congress didn’t intent “TEA” to mean Midtown Manhattan, South Beach, and Beverly Hills…(-; Without this tampering with census tracts, the high-rise projects which dominate EB-5 will have to play on a fair playing field and secure the non-TEA, “full fare” million dollar investors they’ve never been able to find in the past.
NOTHING will personally gratify me more than meaningful TEA reform, so that those few EB-5 Regional Centers like AVS which are seriously committed to creating American jobs where they are most needed and who find our investors one at a time (and not via high-volume migration agents who care only about their commissions) can bring more EB-5 dollars and jobs to rural America.
SOOO…what’s a prospective EB-5 investor to do at this point? Well, having discussed that very question with hundreds of prospective investors in the past year, my answers:
- If you’ve studied EB-5 carefully and concluded that it is right for you and your family, choose the BEST, most-trusted EB-5 project you can find and invest BEFORE Sept. 30th in order to come in at the $500,000 threshold, because the price is certain to go way up.
- If you are still on the fence but want to avoid the investment dollar increase, find a conservative, loan-based EB-5 project with a proven reputation and invest BEFORE Sept. 30th…even if you ultimately decide NOT to immigrate to the U.S., you’ll tie up your money at a lousy little annual interest rate for 5 years but it will potentially save you hundreds of thousands if you DO decide to immigrate.
- If you are from mainland China and are even THINKING about EB-5 and have the money, choose a conservative, loan-based project and get in line now while you still can. Without an increase to the 10,000, EB-5 visas could one day soon be “unavailable” on the Visa Bulletin to Chinese nationals.
- If you are new to EB-5, if you have not had time and will not have time to carefully choose a project in the next few weeks, or if you feel overwhelmed by all the marketing hoopla you’ve been saturated with in your country…hang onto your money and don’t get pressured into making a decision when you are not really ready.
If you have questions and want honest answers from the only EB-5 Regional Center to exclusively offer Forbes-pedigree projects, write us at firstname.lastname@example.org and we’ll do our best to guide you in this important decision!
P.S. for those of you who want to go deeper into the EB-5 reform crystal ball, NOBODY does a better job of filling in the blanks and analyzing the details objectively than EB-5 business plan writer and overall EB-5 guru Suzanne Lazicki: check out her latest blog on EB-5 reauthorization if you want to know more: https://blog.lucidtext.com/2016/09/05/looking-toward-rc-program-reauthorization/
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