A quick search on the EB-5 Program will turn up dozens of articles on the merits of the EB-5 Regional Center Program, but is an EB-5 direct investment a better option?
What are the benefits of direct investment? Why do foreign entrepreneurs still continue to choose it?
Both the EB-5 direct investment and the EB-5 regional center routes have their advantages and disadvantages. The EB-5 Program is extremely flexible and appeals to investors of both high and low risk tolerances.
Foreign investors flock to the EB-5 Program due to the fact that it has no requirements such as age limits, business experience, language fluency, or travel restrictions.
A parent could gift their child capital so that they can invest in the EB-5 Program while they attend university. Many young adults are turning to EB-5 after hearing about the H1-B visa issues.
Once potential investors have set their sights on the EB-5 Program, they have the choice between investing in the direct program or the regional center program. Each program has their merits, but for many, the EB-5 direct investment program offers the best options.
What are the benefits of an EB-5 direct investment?
1. You have more freedom and flexibility when it comes to the type of business you choose.
With a direct investment you're not limited by the industries that a particular regional center has an interest in. You can invest your capital into a business in an industry you know and in a location you desire.
2. You can be actively involved in the running of the business.
One of the benefits of a regional center investment for many EB-5 investors is not having to manage their business day to day. However, many investors want that active day to day management. They know that their knowledge can help that business grow. With growth comes the potential for higher returns on their investment.
3. Direct investments have lower fees.
Since direct investors are not paying for the regional center overhead such as marketing costs, they typically have lower fees. EB-5 applicants who chose direct investments also have more control over various fees, such as how much they want to invest into marketing.
4. Sometimes the best investment is investing in themselves.
EB-5 investors who chose the direct investment route are often experts in a particular industry. If their business needs to generate more jobs they can often find ways to create them, thus reducing the risk involved. Investors in the regional center program, however, must rely on the regional center project team to complete the project and create the requisite number of jobs. This requires them to conduct thorough due diligence into the regional center team to make sure that they have a solid reputation and track record.
5. Direct investments can generate higher returns.
Typically, investors in regional center projects see small returns on their investment because they're more concerned with obtaining visas for themselves and their families. Investors in direct investments, on the other hand, could potentially see high returns on their investments because there is no limit. Direct EB-5 investors make a trade-off. They take higher risks for the potential for higher returns.
The EB-5 Program offers many options for investors who understand their risk tolerance and goals. Consulting with an immigration attorney can help an investor get started on the best path for reaching those goals.