While EB5 Capital’s project selection and due diligence has always been rigorous, it is even more important now due to the pandemic and the uncertain global economy. Before selecting an EB-5 project, prospective investors should thoroughly review the performance and background of the Regional Center sponsors they are considering. The Regional Center sponsoring the EB-5 investment is just as, or perhaps more important than, the project itself. We prepared a list of common questions to help prospective investors with their due diligence process.

EB-5 is a highly specialized, niche business. How long have you been in business? What year did you receive your first Regional Center license? Has there been any SEC action or enforcement against you?

Generally, the longer a company has been around, the more likely it has successfully weathered the challenges of the industry. Since the EB-5 industry is constantly evolving and can be volatile at times, an RC’s longevity should signal to prospective investors traits of stability and success. Although the EB-5 Program was rolled out approximately 30 years ago, the Program became better known after the global financial crisis in 2008 when projects needed new sources of capital. RCs that have been in operation since at least 2008 are counted as pioneers in this specialized industry. A deep Google search should tell you a lot about an RC’s track record and is a good place to start.

How many projects have you completed since you were established?

The number of EB-5 deals an RC has completed is paramount. If an RC has successfully completed 20+ projects, then it clearly knows what it’s doing. An RC may have 1,000+ investors, but only three or four completed projects, which likely isn’t enough experience to give investors comfort. Projects, especially real estate projects, can be complicated, and repetition usually brings success.

How many projects have received I-526 approvals? What about I-829 approvals? How many projects have been repaid?

These are the three questions to ask exactly in this way. By simply asking, “What is your track record?” any RC can claim that it has a 100% project-approval rate… but the more precise question is across how many deals? The true test of an RC’s track record is whether they have led investors through the full immigration and investment cycle. Are you more comfortable investing your money with an RC that has only reached the I-526 or I-829 stage, or are you more comfortable knowing that the RC you will select has finished the full cycle (i.e., issuance of permanent green card and repayment of funds) across a variety of projects?

In addition to securing a Permanent Green Card for my family, receiving our full capital back is especially important. Please tell me about the security of my capital.  Have all your projects been repaid within the investment term?

In addition to asking how many EB-5 projects have been repaid, find out whether these repayments have been executed on time. A typical investment term in EB-5 usually lasts anywhere between five to eight years. Has the RC always repaid their clients within this timeframe, or have they delayed their repayments because their projects may have defaulted? If they defaulted on their projects, ask questions about the underlying reasons for the default.

I’ve heard about redeployment, but don’t quite understand it. What is redeployment and what is your redeployment strategy?

In 2014, the EB-5 industry started noticing early indications of a potential visa backlog (the 10,000-visa allocation for the EB-5 category had previously been sufficient since the Program’s establishment in 1990). Per USCIS policy, every EB-5 investor is required to maintain their funds “at-risk” through the completion of their two-year conditional residence period (or sustainment period). Redeployment is necessary to maintain the funds “at-risk,” if an EB-5 investment is repaid before an investor completing their respective sustainment period. In other words, if a project is completed and repaid before an investor applies for a permanent green card, then investors need to re-invest (redeploy) their funds. As the visa backlog was becoming more severe, several RCs started preparing their strategies for future redeployment. Today, redeployment is quite common, especially given the lengthy USCIS processing times. We strongly encourage prospective investors to understand the RC’s redeployment plan and redeployment experience.

How geographically diverse is your investor pool?

It is a good sign if the RC has attracted capital from all around the world. For example, if a Brazilian, Greek, and Korean investor all invest with the same RC, this means that the investment has universal value and appeal. It also means that the RC’s network of investors is vast. On the other hand, if the pool of investors hails only from one geographic area, the risk rises if the regional market dries up (like we’ve seen before in this industry). An RC with a diversified investor pool will be able to continue to attract funds from other parts of the world.

This likely will be a 5 to 8-year relationship (depending on my country of birth). I want to make sure I am partnering with a strong, reliable group. Please tell me about your team. How large is it? What kind of relevant experience does your team have?

Ask yourself if the RC can give you quality attention or if the RC staff is just a handful of people. Ask how many people work on EB-5 and how much experience do they have in servicing EB-5 requirements. Some companies may appear to be very large, but their actual EB‑5 department is small and their experience may be rather thin. Do the biographies of the team members that will be supporting you reflect the breadth and depth of experience you need? Do their academic backgrounds and prior work experience add up and reveal the type of support you need?

What is the background of your CEO and President? Who is part of the senior leadership team?

Does the CEO or President of the RC have a unique story on how they entered the industry? What types of leadership positions do members of the management team hold? Are these positions exclusive to the EB-5 industry or do they branch out beyond?

EB-5 is a one-time investment for me. I want to make sure I am taken care of throughout the process. Please tell me about the services you provide once I become an investor.

Find out ahead of time what type of support you will receive from the RC and how often you will be communicating with your dedicated contact(s). Ask if there are there any additional perks that you might be offered after you sign up as an investor. Make sure you are clear on expectations upfront.

Are you able to connect me with a past investor?

Before committing any large sum of money, speak to a few past investors that have invested with the RC you are considering. When you talk to another investor, is the person sharing detailed information or just giving you a broad brush? The more detailed information they can give you, the better. Do they have good things to say about their experience? Do they have any advice for you?

Thorough due diligence is the key to success. Our goal is for you to secure your permanent residency and the return of your initial capital investment. We wish all investors the best of luck on their immigration and investment journey, and we hope you will allow us to guide the way!