Go Back  British Expats > Living & Moving Abroad > USA
Reload this Page >

Getting money back from EB-5 investment

Getting money back from EB-5 investment

Old May 28th 2012, 12:01 am
  #1  
Grumpy Know-it-all
Thread Starter
 
Steve_'s Avatar
 
Joined: Jul 2010
Location: Calgary, Alberta
Posts: 8,928
Steve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond repute
Default Getting money back from EB-5 investment

Has anyone actually managed to pull this off after having their conditions removed from their LPR status?

Or were you so thrilled with the investment you decided to keep it?
Steve_ is offline  
Old May 28th 2012, 9:37 pm
  #2  
Lost in BE Cyberspace
 
Boiler's Avatar
 
Joined: Mar 2004
Location: Colorado
Posts: 33,360
Boiler has a reputation beyond reputeBoiler has a reputation beyond reputeBoiler has a reputation beyond reputeBoiler has a reputation beyond reputeBoiler has a reputation beyond reputeBoiler has a reputation beyond reputeBoiler has a reputation beyond reputeBoiler has a reputation beyond reputeBoiler has a reputation beyond reputeBoiler has a reputation beyond reputeBoiler has a reputation beyond repute
Default Re: Getting money back from EB-5 investment

I have seen it mentioned in a thread last year.

But it has also been said that return of the investment should be considered a bonus.
Boiler is offline  
Old May 29th 2012, 8:06 am
  #3  
411
Forum Regular
 
411's Avatar
 
Joined: Oct 2011
Posts: 192
411 is an unknown quantity at this point
Default Re: Getting money back from EB-5 investment

For those who invested 4% has got to be better than 1% in the bank
411 is offline  
Old May 29th 2012, 1:40 pm
  #4  
Lost in BE Cyberspace
 
Boiler's Avatar
 
Joined: Mar 2004
Location: Colorado
Posts: 33,360
Boiler has a reputation beyond reputeBoiler has a reputation beyond reputeBoiler has a reputation beyond reputeBoiler has a reputation beyond reputeBoiler has a reputation beyond reputeBoiler has a reputation beyond reputeBoiler has a reputation beyond reputeBoiler has a reputation beyond reputeBoiler has a reputation beyond reputeBoiler has a reputation beyond reputeBoiler has a reputation beyond repute
Default Re: Getting money back from EB-5 investment

Spanish government pays more than that.
Boiler is offline  
Old May 29th 2012, 4:16 pm
  #5  
Grumpy Know-it-all
Thread Starter
 
Steve_'s Avatar
 
Joined: Jul 2010
Location: Calgary, Alberta
Posts: 8,928
Steve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond repute
Default Re: Getting money back from EB-5 investment

I just keep thinking about it for some strange reason, bizarrely mainly because I think to myself these investments must be reasonably decent and well thought out if they've had to please USCIS. And there's not much rate of return on anything else at the moment.

I knew someone in California who invested in some farming collective thing though and they were reasonably happy with it but didn't seem to have much idea if they'd ever get their capital back.

$500,000 is a lot of money though, obviously.
Steve_ is offline  
Old May 29th 2012, 4:41 pm
  #6  
Lost in BE Cyberspace
 
Boiler's Avatar
 
Joined: Mar 2004
Location: Colorado
Posts: 33,360
Boiler has a reputation beyond reputeBoiler has a reputation beyond reputeBoiler has a reputation beyond reputeBoiler has a reputation beyond reputeBoiler has a reputation beyond reputeBoiler has a reputation beyond reputeBoiler has a reputation beyond reputeBoiler has a reputation beyond reputeBoiler has a reputation beyond reputeBoiler has a reputation beyond reputeBoiler has a reputation beyond repute
Default Re: Getting money back from EB-5 investment

Cheap for a GC.
Boiler is offline  
Old May 29th 2012, 5:14 pm
  #7  
BE Enthusiast
 
Joined: Nov 2007
Posts: 904
cranston has a reputation beyond reputecranston has a reputation beyond reputecranston has a reputation beyond reputecranston has a reputation beyond reputecranston has a reputation beyond reputecranston has a reputation beyond reputecranston has a reputation beyond reputecranston has a reputation beyond reputecranston has a reputation beyond reputecranston has a reputation beyond reputecranston has a reputation beyond repute
Default Re: Getting money back from EB-5 investment

Originally Posted by Steve_ View Post
I think to myself these investments must be reasonably decent and well thought out if they've had to please USCIS.
IMO, from the USCIS side, there are 3 main issues, (1)was the money earned legally (2) are the job creation numbers realistic / provable and (3) does the investor keep their money in for the minimum period needed,

I see no evidence to suggest that USCIS cares if the investor makes or losses money.
cranston is offline  
Old May 29th 2012, 5:26 pm
  #8  
411
Forum Regular
 
411's Avatar
 
Joined: Oct 2011
Posts: 192
411 is an unknown quantity at this point
Default Re: Getting money back from EB-5 investment

Originally Posted by cranston View Post
I see no evidence to suggest that USCIS cares if the investor makes or losses money.
I agree but the use of the 10,000 available visas yearly is growing exponentially. Im wandering how they will deal with the cap being met perhaps they will start finding undue faults with applications
411 is offline  
Old May 31st 2012, 5:40 pm
  #9  
Grumpy Know-it-all
Thread Starter
 
Steve_'s Avatar
 
Joined: Jul 2010
Location: Calgary, Alberta
Posts: 8,928
Steve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond repute
Default Re: Getting money back from EB-5 investment

Originally Posted by cranston View Post
I see no evidence to suggest that USCIS cares if the investor makes or losses money.
Yes true but it obviously focuses the minds of the people setting up the investment. Which is what I'm concerned about. But I want to get my money back.
Steve_ is offline  
Old May 31st 2012, 5:41 pm
  #10  
Grumpy Know-it-all
Thread Starter
 
Steve_'s Avatar
 
Joined: Jul 2010
Location: Calgary, Alberta
Posts: 8,928
Steve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond repute
Default Re: Getting money back from EB-5 investment

Originally Posted by Boiler View Post
Cheap for a GC.
Honestly that is somewhat a secondary concern anyway. At least for me.

Last edited by Steve_; May 31st 2012 at 5:51 pm.
Steve_ is offline  
Old May 31st 2012, 5:48 pm
  #11  
Grumpy Know-it-all
Thread Starter
 
Steve_'s Avatar
 
Joined: Jul 2010
Location: Calgary, Alberta
Posts: 8,928
Steve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond reputeSteve_ has a reputation beyond repute
Default Re: Getting money back from EB-5 investment

Originally Posted by 411 View Post
I agree but the use of the 10,000 available visas yearly is growing exponentially. Im wandering how they will deal with the cap being met perhaps they will start finding undue faults with applications
Well the impression I'm getting from reading the posts on here and also all the USCIS blurb of late is that they're super keen to get people to invest because the quota was unused, so they've put more people on it, and the end result has been more bureaucratic nit-picking which is actually counterproductive!

It's just the investments themselves now look much more attractive because they're usually under the auspices at some point of some local govt. entity and the rates of return were never that exotic but at the moment they look quite good.

But one assumes at some point they will go back to looking rather unimpressive so an exit strategy is important.

However from an immigration standpoint, I have no doubt more people will want to use EB-5, if only because the Canadian IIP now has a much higher investment amount required. But the IIP is less risky than EB-5.

From the standpoint of a Canadian the quality of the investment is more important and getting LPR status is less important than for other immigrants.
Steve_ is offline  
Old Jun 1st 2012, 11:22 am
  #12  
411
Forum Regular
 
411's Avatar
 
Joined: Oct 2011
Posts: 192
411 is an unknown quantity at this point
Default Re: Getting money back from EB-5 investment

Well sunset for the EB5 is september hopefully I can get my EB5 application shoved in before then
I agree return is most important, im buying undervalued commercial real estate as part of the required $500K investment. I purchased a 2500sf building 4 miles from LAX for $170K working on a short sale chiropractors office on 7500 sf lot close by. Once I get that ill put my business plan together. Exit strategy? appreciated real estate. Rate of return? entirely up to how hard I intend to work the business... but Im almost certain that it will be above 4% considering that just leasing either premises gives a yield of about 11%
411 is offline  
Old Jun 1st 2012, 3:52 pm
  #13  
BE Commentator
 
S Folinsky's Avatar
 
Joined: Feb 2010
Location: Los Angeles, California
Posts: 7,368
S Folinsky has a reputation beyond reputeS Folinsky has a reputation beyond reputeS Folinsky has a reputation beyond reputeS Folinsky has a reputation beyond reputeS Folinsky has a reputation beyond reputeS Folinsky has a reputation beyond reputeS Folinsky has a reputation beyond reputeS Folinsky has a reputation beyond reputeS Folinsky has a reputation beyond reputeS Folinsky has a reputation beyond reputeS Folinsky has a reputation beyond repute
Default Re: Getting money back from EB-5 investment

Some general comments:

The EB-5 status was created by the Immigration Act of 1990 -- it was somewhat controversial given a visceral reaction against "buying a green card." I recall a speech by then Congressman Bruce Morrison who was chair of the Immigration Subcommittee of House Judiciary Committee in 1987 regarding the then proposed legislation. He did not like it, however, as a Representative from Connecticut he was aware of the fact that Yale University would admit children of large donors. He analogized the two situations.

On the "sunset" -- that is for the "regional center" program ONLY. The individual EB-5 investment category is not set to expire.

On OP's question -- one might want to look at a group of four cases published in Summer 1998 in volume 22 of the I&N Decisions: Soffici 22 I&N Dec 158, Izummi 22 I&N Dec. 169, Hsiung 22 I&N Dec 201, and Ho 22 I&N Dec. 206. On the refund of investment, Izummi is of particular interest.
S Folinsky is offline  
Old Jun 1st 2012, 10:36 pm
  #14  
Just Joined
 
usadvisors's Avatar
 
Joined: Apr 2012
Location: Tampa, FL
Posts: 5
usadvisors will become famous soon enough
Default Re: Getting money back from EB-5 investment

There are only six EB-5 Regional Centers which have been successful in getting an investor's I-829 petition approved and even fewer that have returned any of the principal at all. If you consider that most of the capital invested over the past five years (which accounts for over 90% of the capital invested in the program's entirety) went into commercial real estate projects then one should definitely be concerned about getting their full principal repaid.

There are many reasons why most investors will only get a fraction of their capital investment returned, but here are a few:

1. The prices paid for real estate prior to 2007-2008 were among the highest ever paid in the U.S. market
2. The development fees associated with these Limited Partnership pools were also among the highest seen in any investment class
3. The costs of materials, labor and equipment were also at an all time high due to the frenzied pace of activity and global competition for resources (remember China buying all of the steel that they could?)

This resulted in the EB-5 GPs and LPs paying more to have their projects developed than the traditional sources of funding (banks) would participate in, hence their reason for funding through EB-5. The GPs typically don't care as they have no or little equity in the capital stack and the LPs all of the risk in the development costs and expenses. The agents, "finders" and promoters could care less as they are paid a commission up front for getting investors to sign up.

Carry forward to the market valuations for these assets which were built into existing inventory and declining absorption and the investors will find that while the market has improved from 2008 it has not reached pre-recession valuation levels. Many of these assets are under (or non) performing and if the GPs do exit to a REIT or through a refinancing, they may receive only a fraction of the original development or capital expenditure.

Certain asset classes have suffered most of all, such as resort properties as U.S. disposable income is still depressed and there is too much uncertainty about current economic conditions for the average American to indulge in purchasing secondary rental properties or going on extended vacations. Others such as a few (not all) hotel properties have actually increased in value given the increased tourism from abroad.

In general, most private equity investments, and especially commercial real estate with among the highest risk/return standard deviations of any asset class, coupled with the transactions and development fees amounting to 10-20%+ of the transaction for the EB-5 investors, then one can see how difficult it would be to expect to receive the original investment returned.

So while it is uncertain how much the Limited Partners will receive in return for their original $500,000 capital contribution, it should not come as a surprise if many only get a fraction of what they were expecting, to expect otherwise, given the current market, the choice of investment and associated fees, would be unreasonable.
usadvisors is offline  
Old Jun 1st 2012, 10:41 pm
  #15  
Forum Regular
 
Joined: Dec 2003
Posts: 275
ginstwin is a jewel in the roughginstwin is a jewel in the roughginstwin is a jewel in the roughginstwin is a jewel in the rough
Default Re: Getting money back from EB-5 investment

Originally Posted by usadvisors View Post
There are only six EB-5 Regional Centers which have been successful in getting an investor's I-829 petition approved and even fewer that have returned any of the principal at all. If you consider that most of the capital invested over the past five years (which accounts for over 90% of the capital invested in the program's entirety) went into commercial real estate projects then one should definitely be concerned about getting their full principal repaid.

There are many reasons why most investors will only get a fraction of their capital investment returned, but here are a few:

1. The prices paid for real estate prior to 2007-2008 were among the highest ever paid in the U.S. market
2. The development fees associated with these Limited Partnership pools were also among the highest seen in any investment class
3. The costs of materials, labor and equipment were also at an all time high due to the frenzied pace of activity and global competition for resources (remember China buying all of the steel that they could?)

This resulted in the EB-5 GPs and LPs paying more to have their projects developed than the traditional sources of funding (banks) would participate in, hence their reason for funding through EB-5. The GPs typically don't care as they have no or little equity in the capital stack and the LPs all of the risk in the development costs and expenses. The agents, "finders" and promoters could care less as they are paid a commission up front for getting investors to sign up.

Carry forward to the market valuations for these assets which were built into existing inventory and declining absorption and the investors will find that while the market has improved from 2008 it has not reached pre-recession valuation levels. Many of these assets are under (or non) performing and if the GPs do exit to a REIT or through a refinancing, they may receive only a fraction of the original development or capital expenditure.

Certain asset classes have suffered most of all, such as resort properties as U.S. disposable income is still depressed and there is too much uncertainty about current economic conditions for the average American to indulge in purchasing secondary rental properties or going on extended vacations. Others such as a few (not all) hotel properties have actually increased in value given the increased tourism from abroad.

In general, most private equity investments, and especially commercial real estate with among the highest risk/return standard deviations of any asset class, coupled with the transactions and development fees amounting to 10-20%+ of the transaction for the EB-5 investors, then one can see how difficult it would be to expect to receive the original investment returned.

So while it is uncertain how much the Limited Partners will receive in return for their original $500,000 capital contribution, it should not come as a surprise if many only get a fraction of what they were expecting, to expect otherwise, given the current market, the choice of investment and associated fees, would be unreasonable.

Very interesting points and well written.
Cant disagree with much that you have said.

However if one would look to an EB5 today your points 1 and 3 would show better value today. In other words investments this year have a better chance in my opinion than those of 2007-08.

All investments are risky just look at todays stock market move, however to answer the OP question i think that asset backed developments with no loans tied to them may have a chance of repayment.
ginstwin is offline  

Contact Us - Archive - Advertising - Cookie Policy - Privacy Statement - Terms of Service - Do Not Sell My Personal Information -

Copyright © 2018 MH Sub I, LLC dba Internet Brands. All rights reserved. Use of this site indicates your consent to the Terms of Use.