Due to the long EB5 visa process, which can take years for approval, it’s crucial that you don’t make the same common pitfalls that many investors do. Knowing the mistakes others make can help you avoid them.
What pitfalls are most common?
We’re going to examine them shortly, but it’s important to first understand how the program works in the first place.
Understanding the EB5 Program
EB5 programs were first introduced in 1990 to help stimulate the economy and help create jobs across multiple sectors. Initially, there were only 10,000 visas available, but this has since been expanded.
Investors with the capital have two main options to have their visa approved:
- Invest $800,000 in rural areas with unemployment rates of 150% of the national average
- Invest in $1,050,000 in non-rural projects
For your petition to be approved, you must conduct extensive due diligence on the project you plan on investing in. Projects must be for profit, and within two years of the investment, at least 10 full-time jobs must be created.
There are some exceptions, but these are the basic requirements of the program.
Conducting Thorough Due Diligence
The first pitfall that investors fall into is not conducting extensive due diligence. You need to do more than simply invest your money into a project and hope for success. Shoora EB5 offers extensive help in this regard because all of the projects have been vetted.
Due diligence must include:
- Extensive business plan reviews to understand the validity of the project
- Recruiting, meeting and verifying that the developer is reliable and can complete the project
- Reviews of the local area and the demand for the type of business that you’ll invest in
Projections and forecasts will help you better understand the project’s potential to create full-time jobs and provide a solid return on your investment.
Regional centers are a good option for investors because you can invest in large-scale projects. Additionally, a regional center needs to create either 10 direct or indirect jobs.
Identifying Red Flags in Investment Projects
As part of the EB5 visa process, before you pay for any filing fees or hand over any investment capital, you need to consider common red flags. Investments of these sizes always come with potential risks that you’ll want to consider beforehand.
Red flags found in EB5 visa projects are:
- Unlicensed professionals in charge of project development
- Offers that offer too much return
- Pitches that “everyone” is investing
- Pressure to invest in the project immediately
- Multiple payment requirements
- Lack of forecasts, business plans or other documents
- Close ties to an immigration attorney or the person assisting you
Investor.gov provides a checklist that you can use to identify project red flags. You need to perform your due diligence before making the investment and should work with a reputable company or lawyer who can help you through this stage of the process.
Ensuring Job Creation Requirements Are Met
EB 5 investment projects must create jobs, as mentioned before, which is why many investors hope to invest in real estate development or hotels. You must be sure of a few things:
- If the business projections come to fruition, ten or more full-time employees will be required.
- Verify that the local market has a demand for the project and that the number of residents is necessary to fill open positions.
If you cannot ensure job creation, consider another investment project.
Navigating the Consular Processing Phase
Before approval, consular processing will be required. This process will require:
- Immigration interview
- Medical examination
- Biometric data
You can work with an immigration attorney who will walk you through the consular process.
Protecting Against Investment Scams
EB 5 investment projects are ripe with scams that try to rob investors of their hard-earned capital. While the types of scams evolve and change over time, they almost always do a few things:
- Make promises of permanent residency
- Guarantee returns on your investment
- Mention of no risk
If investments are not registered, it may be a scam. The SEC and USCIS both have alerts when scammers target investors, so it’s worthwhile to pay attention to any alerts that these agencies may announce.
Understanding Financial Risks
Investments always come with financial risks. You can invest in what should be a sure-fire investment that offers a strong return on investment and a path to permanent residency.
But, if the project fails, you need to be prepared for the financial impact.
If projects are partially completed and no drastic changes to the project exist, there may be an opportunity to complete the immigration process. Working with an attorney at this time is advised.
In Conclusion
EB5 projects in the USA open a straightforward pathway for investors to invest and reside in the country. If you want to become a permanent resident, there is a possibility in the future.
Avoiding common mistakes and selecting a project with a high chance of success is your easiest option for receiving approval.
