Questions to Ask a Regional Center or Developer Before Investing
Investing in EB-5 projects, often facilitated by a Regional Center or directly through a developer, requires thorough due diligence. Asking the right questions upfront is crucial to protecting your capital and ensuring a smooth path to a Green Card. This guide outlines essential inquiries for both the Regional Center and the underlying developer.
Questions for the Regional Center (RC)
The Regional Center acts as the intermediary and compliance overseer. Their experience and structure are paramount.
- Experience and Track Record:
- How many projects has the RC managed to completion?
- What is the success rate for I-526 and I-829 approvals across all sponsored projects?
- How long has the principals of the RC been involved in the EB-5 program?
- Compliance and Operations:
- Who serves as the third-party compliance monitor, and what is their fee structure?
- Describe your process for monitoring job creation reports and ensuring adherence to USCIS regulations.
- What is the RC's policy regarding fund repatriation timelines?
- Fees and Structure:
- Provide a detailed breakdown of all administrative, legal, and offering fees charged by the RC.
- Are there any potential future fees not explicitly stated in the Private Placement Memorandum (PPM)?
Questions for the Project Developer
The developer is responsible for executing the business plan and creating the required jobs. Their financial stability and expertise matter most.
- Project Viability and Execution:
What is the developer's specific experience in this type of real estate or business venture (e.g., hospitality, infrastructure)?- Provide a detailed construction timeline, including contingency buffers.
- What is the projected Internal Rate of Return (IRR) for the project, and what assumptions underpin this projection?
- Capital Stack and Risk Mitigation:
How is the project capitalized, and what is the EB-5 capital’s position in the capital stack?"We need clarity on whether EB-5 funds are senior or junior debt, and what collateral secures our investment."- What percentage of the total project cost is covered by non-EB-5 funding (e.g., senior construction loans)?
- What are the specific triggers that would lead to the developer seeking additional financing or restructuring?
- Job Creation Methodology:
How exactly will the required 10 full-time equivalent (FTE) jobs be created and substantiated?
If the project relies on indirect job creation, ask:
What economic model (e.g., RIMS II, IMPLAN) is being used, and by whom was the initial job impact study prepared?
Legal and Documentation Review
Ensure your own legal counsel reviews the following documents thoroughly:
- The Private Placement Memorandum (PPM) for risk disclosures.
- The Subscription Agreement, paying close attention to withdrawal rights and default clauses.
- The Loan Agreement, specifically examining the repayment schedule and security interests granted to EB-5 investors.
Crucially, ask:
"If the I-829 petition is denied due to circumstances outside of my personal ineligibility (e.g., insufficient job creation), what remedies or protections are in place for the return of my principal investment?"
A successful EB-5 investment hinges on transparency. Any reluctance from a Regional Center or developer to provide detailed, verifiable answers to these fundamental questions should be treated as a significant red flag, potentially warranting a search for alternative investment opportunities.