EB5 Investors Magazine Volume 5, Issue 2 - Page 39

THE BASICS OF EB-5 Practical Steps for Investors in Traditional & Emerging Markets Considering Regional Center Versus Direct EB-5 Investments  What considerations should potential investors take into account when it comes to selecting the route for their EB-5 investments. By Aaron Goforth, Phuong Le and Osvaldo Torres W e probably all know someone who’s gone through the headaches of selecting an EB-5 project. If you’re an overseas investor who’s interested in the EB-5 program, you begin your thoughtful due diligence process, wade through stacks of glossy marketing brochures for multimillion-dollar condo developments, 4-star hotels or bridges. Some projects seem appealing, while others not as much. However, there are various issues that might begin to eat at you, namely, most EB-5 projects give what you consider a marginal return and you also might not like the idea of giving up control to someone else. At some point in the process, you might consider creating an investment through your own direct or regional center EB-5 project. Is this a good idea? The answer is: DIRECT OR REGIONAL CENTER EB-5? Practical Issues to Consider for Direct EB-5 and Regional Center as Risk Mitigation If you are wondering whether you should you invest in your own project, you should pursue this option only if you’re willing to invest much more than the current minimum investment amount of $500,000. Understand that minimum wage laws may eat up a third or more of your start-up capital, there are tedious document keeping requirements, and compliance with federal immigration (I-9, E-Verify), local employment, labor and employment benefits laws. Higher Total Investment Although it may be tempting to consider going the direct EB-5 route, it’s worth considering that the risk calculus concerns more than maximizing your return on investment (ROI). If you’re using the direct EB-5 model, there are hidden back end costs to consider that may doom both the project and the intended job creation. "...it may be tempting to consider going the direct EB-5 route..." “Maybe.” Below, are some considerations an investor should consider before taking the plunge. There are pros and cons if an investor considers using the direct or regional center route. There are also advantages of hiring an experienced team of professionals and their roles in structuring the project with the purpose of creating a deal that meets both immigration and investment goals. You may have higher ROI, yes, but your total investment will be far greater than $500,000. After all, in addition to putting up the initial investment, you will be responsible for securing the rest of the capital to operate the business as well. This is magnified when you consider things from a small business and employment perspective. Investors EB5INVESTORS.COM 38