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Is an EB5 investor visa really the best answer for relocation and/or retirement in Which of the various EB5 investor visa projects have proven track records and which raise concerns? We examine the options minus the sales spiel. What is the EB5 investor visa pilot programme? Background Since the end of 2003 an increasing number of British and Irish citizens have been emigrating via the EB5 investor visa (pilot programme), attracted by the following features. The EB-5 immigrant investor visa attracts foreign capital into the The comparatively recently introduced EB5 immigrant investor (pilot programme) requires a minimum investment of $500,000 (approximately £249,000 at the current rate of exchange) in a 'Regional Centre'. The $500,000 investment must create full-time employment for at least 10 The EB-5 investor visa Pilot Program expires on September 30, 2008 so if this visa is of interest it is necessary to act sooner rather than later. History The first EB5 UK applicants for US visas, (under new rules) were approved over three years ago. Importantly there is now a track record of immigrants who were processed through this specific programme, have subsequently lived in America for two years and are coming up to the time when they can determine how their investment can be recouped. . For those looking for freedom to work in whichever way best suits them, or even to retire to the A Green Card (As long as certain conditions are met) can provide a lifetime's Legal Permanent Residency for the applicant, his or her spouse and any offspring under the age of 21. Indeed it is a path to Different Programmes There are a number of companies advertising in the UK and on the web as offering an EB-5 investor visa (pilot programme) option, not all these companies as yet have all the required registrations, a track record of visa investment using this programme or make clear some important LIMITATIONS AND DANGERS so be wary. If you would like a briefing or would just like details of the programmes which are approved as Regional Centres please contact us (details below). It is up to each visa applicant to select a programme and professional investment and legal advice should be sought. To date the majority of British investors have been concerned that options should have a proven, measurable track record, there seems to be a preference for freehold commercial properties or property secured options and schemes which can be financed in a number of ways including applicant’s pension funds, however there are implications that they often fail to realise when making this judgement. Application and timing The total time from application to approval takes approximately nine to fifteen months and at the time of writing every EB5 regional centre investor in certain programmes has received a CONDITIONAL green card, however some programmes have encountered specific difficulties which are not being flagged up on the web. Once an applicant has invested in an approved programme their Attorney files Form I-526, (Immigrant Petition by Alien Entrepreneur) with the appropriate regional Regulations require that the investor demonstrates assets were gained in a lawful manner. This requires the investor to prove his investment funds were obtained through lawful business, salary, investments, property sales, inheritance, gift, loan, or other lawful means. After form I-526 is approved overseas applicant must attend an interview at the US Embassy in their country to ensure that the investor and his or her family undergo medical, police, security and immigration history checks before the conditional permanent resident visas are issued. At the interview, the consulate officer may address these issues. If the investor and his or her family are legally based in the This takes the whole application process to between nine months and fifteen months. A conditional Green Card is then issued allowing the investor to emigrate with immediate family. (Spouse and children under 21 at the time of application). The first requirement of any investor after they receive the visa at the The investment must be held for a further two years, bringing the total investment time to approximately three years. At that stage an application is made to the Immigration Service office for 'Removal of Conditions', which takes a further two or three months. Once the conditions have been removed the investment may be sold in certain circumstances although there are important points to bear in mind regarding this. This is a particularly critical stage and unfortunately far too little attention seems to be given to an exit strategy by some of the programmes. Why E2 holders are also looking at the EB5 option Many are familiar with the E2 visa programme which has been the traditional route for emigration to the New E2 applicants are finding a lengthy waiting period, possibility of rejection and the need to inject an increasingly higher level of funding to find a qualifying business. There are particular concerns There are thousands of E2 visa holders living in the US, but sooner or later they are going to have to confront their status and sort it out for the long term, for if they sell their business or it ceases trading, their visa won't be renewed. Also, their children at 21 will need their own visas or be forced to leave the Who has gone down the EB5 route and why Most people need between four and 12 months to investigate options, make the decision and then organise their affairs. Interest in the visa has been increasing and looks likely to continue growing over the next year at least as the desire to emigrate gains momentum, stimulated no doubt by increased awareness of the advantages offered by the USA such as a year round outdoor lifestyle, (Florida and Southern California) certain school areas, taxes etc. Approximately 130 British/Irish citizens have taken the EB-5 (pilot programme) route. Outside the One of the British couples making an investment in return for a Green Card was Michael and Pamela Green. The couple were among the first dozen Britons to immigrate to For the first two years, their Green Cards had conditions related to maintaining the investment which can then be reviewed and removed. After five years, they can seek citizenship. They left to move permanently into the holiday home they bought in "There is a swimming pool, a fitness centre and the same amount of land but other people take care of it," said Mr Green. "I don't have to cut the grass or clean the pool." He added: "We now enjoy a comfortable lifestyle, a very nice climate, with English-speaking people, and a low cost of living. The investment is a small amount to pay for that benefit." "The sun shines through the window virtually every day.” Mr Green, a 12-handicap golfer, and a former managing director of a car dealership, added: "The comparison in the cost of living is incredible. Petrol is $2 a gallon, or just over £1. Cigarettes, if you have that nasty habit as we do, are £14 a carton as opposed to £42. There is no television licence. It costs £50 to license our two cars in The couple have a son, a grandchild, and another grandchild on the way. "At my stage of life my family can come to me," Mr Green said. David and Fran Hodgkinson Fran had retained great memories of Having looked at a shortlist of options in Having personally cleared their land of scrub to design their garden Fran returned to her roots with a summer job at the world famous Link to a Daily Telegraph article on Britons retiring on the EB5 visa - click here When is the best time to apply under the EB5 pilot programme As for whether it's a good time to apply for an EB-5, it is worth being mindful of the fact that the visa rules are changing all the time and that this particular programme is scheduled to expire in September 2008 unless extended. The other problem is the limited supply of suitable programmes to meet the heavy demand, particularly from Japanese, Chinese and Korean investors. At the moment those planning to live in A number of British investors perceive that UK house prices may be reaching a peak just as US house prices are at or near a low point – this combined with the Pound looking to be at or near a high point against the Dollar makes the next few months seem to be as good a time as any particularly in light of the programmes end in September 2008. Comments from Consular Office ' I would also like to point out that a non immigrant (E2) visa is not a good option for someone who intends to reside permanently in the It is up to each visa applicant to select a programme. To date the vast majority of investors have opted for certain tried and tested programmes. There appears to be a preference for freehold commercial properties or property secured options and schemes which can be financed in a number of ways including utilising applicants’ pension funds. We have discovered some Companies and Attorneys focus on a single regional centre where they may have a contact or interest rather than providing an overview of the pros and cons for the widest range of proven projects. It is also important to bear in mind that although a regional centre may have offered a particularly attractive programme the next one it offers can be very different. Warehouse conversions North This programme based in a major pacific coast City specializes in buying and managing commercial properties. Much of this property comprises factories and warehouses. By buying a warehouse, for example, dividing and refurbishing as 'out of town' retail units, investors achieve two things. Increased indirect employment, which should qualify the investor for the visa, and higher rents to produce a return claimed to be between six and seven per cent after refurbishment. The company claims an average occupancy level of 96 per cent across its portfolio. The area can be seen to be improving as buildings and the local rail infrastructure are being upgraded. Costco, the giant retailer, has built a store in the old industrial area, and Starbucks has offices there, a major hotel is being built. Each property designated under this investment programme is a limited partnership in which investors own a share proportionate to their investment. The properties undergo a thorough refurbishment prior to letting and rental cheques are distributed monthly. The management company looks after the whole process from acquisition through letting and ongoing management Investors can receive about $25,000 (5% per annum) after management charges and under the visa rules are entitled to sell approximately two years after receipt of their green card; however there are other very important and significant factors you need to be aware of regarding this programme which are not evident from its prospectus. Various legal and processing costs add $45,000 bringing the final investment to approximately $545,000. This investment project has attracted both immigrants and non immigrants (local Americans, which is an interesting factor that has both positive and negative implications) for around ten years, and emigrants that have opted for this programme are able to recount their experiences, which we feel is an important factor, however there are certain important implication regarding this scheme that you should also be aware of. Business Loans - Eastern sea board City This programme based on a Regional Center in a major City on the eastern seaboard directs its efforts at financing projects and developing enterprises within targeted sectors, including hospitality and tourism, trade, technology, higher education, and transportation. The investment period of this program is 5 years which has a number of specific implications when compared to other regional centres. This Regional Center directs its efforts at financing projects and developing enterprises within targeted sectors, including hospitality and tourism, trade, technology, higher education, and transportation. This Center appears large, well established, well managed and secure. The funds are secured by property lien or corporate guarantee. The area appears to be regenerating successfully leading to a more diverse economy and enjoys strong political support an important point which is less evident in some of the other options. Various legal and processing costs for this Center add $40,000 bringing the final investment to approximately $540,000. Loans to government agencies - Californian ex military facilities This programme is based on a the conversion of a number of ex military bases (army and air force) in California and directs its efforts at financing projects such as infrastructure developments such as bridges, roads etc. The investment period of this program is 6 years and in certain cases the loans are unsecured although the Centre emphasises the security that they are made to various government agencies. This programme appears well established, and the present area of focus an airport investment programme is intended to contribute to the successful regeneration of the area, leading to a more diverse economy. Ski Resort Development - Far north east This programme is focused on a The programme has a number of stages and the present plans are based on the construction of an apartment/lodge style complex at the centre of the complex which on completion will be sold as fractional ownerships. This programme raises some interesting questions relating to the area it is in, competition, and time frame amongst other issues which are only really answered when spending time at the existing complex or at our briefing consultation. Various legal and processing costs add $55,000 bringing the final investment to approximately $555,000. Renovation of major City area devastated by hurricane – South This programme is focused on a In this programme, which began last spring, money raised by immigrant investors and pooled as venture capital funds will be used to develop office buildings, hotels, restaurants and medical clinics in the city. So far, the fund has attracted about 50 investors from South Korea, China, Britain and the Middle East, according to the company. Nothing has been built as yet, but with a 30-year contract with the city, the regional centre hopes to invest about $100 million in projects that it says could create thousands of jobs Capital investment is to be targeted at:- This programme raises some interesting questions which we will cover in more detail when we go through the options with you. Various legal and processing costs add $60,000 bringing the final investment to approximately $570,000, which will apparently be offset by the distribution of capital and profits from the funds after five years. How to avoid problems There are a number of reasons why it is important to seek independent advice before taking at the first hand all the claims relating to the programmes. There are a number of areas potential EB5 investors need to be aware of from legal, investment and practical perspectives that are not readily apparent from the various programme details. British applicants in particular have often focused on the investment potential at the expense of the visa implications of the various schemes which may cause them certain problems when it is too late. One of the criteria for the conditions to be removed after two years relates to job creation meeting the required criteria for the EB5. However good the return on investment may be, if a particular project fails to create the required number of jobs there is the real risk that the conditional visa could be revoked. It is evident from site visits to the programmes that there are certain points applicants are not being made fully aware of prior to investment. It is interesting to note that investors from other countries have focused on schemes which monitor closely employment criteria. Another problem is that British visa applicants have little opportunity to verify all the information they are given, in some very convincing brochures and documents. There are significant implications relating to key political considerations behind individual programmes, that may not become evident until the times comes for the conditions to be removed Dangers of Information A key point to be wary off is that all too often brochures and programmes focus naturally enough on the positives but it is important to obtain an independent perspective to ascertain the negatives as implications can be far reaching but not readily apparent, and don’t expect the regional centres to verify points if you do not know what questions to ask! Few Attorneys specialise in the EB5 and many have not visited all the schemes, some work closely with particular schemes. Web sites and brochures tend to emphasise the pros rather than the cons. Some self help web sites aim to be useful but can end being potentially dangerous. One self help blog side has over 20 pages of opinions contributed by those looking at the EB5 or who have does some research. but the correspondence fails to identify fundamental points which in specific circumstances could cause problems. Our Service We have recently visited a number of EB5 options throughout the USA and have spoken to Directors of the various Regional Centers, political representatives, leading Attorneys specialising in the EB5 and members of the government office responsible for the programmes who raised points which were both reassuring and others which are of concern. These points are covered at our briefing. If you would like to be sent information and brochures on the EB5 options, a report looking at certain options from a leading Florida Immigration practice or would like a briefing with Andrew Bartlett on EB5 alternatives and which Attorneys have worked with UK clients on this visa click here or telephone 0207 096 1227 Who are we Andrew Bartlett is an independent emigration, relocation and property consultant ; he also writes articles for guide books, magazines and newspapers on relocating to America and property trends, has constructed a Florida emigration and property consumer web guide www.AndrewBartlettFlorida.co.uk and provides independent and impartial consultations to clients on relocation, locations, properties, agents and trends in America, including the problems often swept under the carpet. He pioneered a briefing consultation service that flags up the negatives to be aware of when relocating to Florida and/or buying, selling property in If you are interested in our comprehensive briefing service for those considering emigration which includes the pitfalls please click here. Recent Article for the British Floridian from an EB-5 Immigration Attorney. For years, the E-2 investor visa represented a realistic option to live and work in the While it is still possible to obtain an E-2 investor visa at the While two to three years ago a $100,000 investment, or even less, in an active U.S. business that employed 2-3 workers easily passed the “marginality” test, this is no longer so, not even if the business is quite profitable. Today, the investment should be in the $200,000+ range, the business should employ at least 5 workers, and the applicant must be able to prove “non-immigrant intent”. (While the E-2 visa regulations do not require that investors maintain a residence in the home country, the Repeat visa renewals face ever increasing scrutiny, not only because the consulate expects the investor to train a U.S. replacement for him/herself, but also because the investor’s wish to continue to direct the U.S. business may be misinterpreted as “immigrant intent”. For many British investors, the E-2 visa route remains the most accessible opportunity to live and work in the U.S., however, applicants should be aware of and knowledgeable about the possibilities and limitations of this visa. For British investors who have the financial means to consider an investment of $500,000 in the Some of these “regional centers” are exceedingly more active and successful than others, and have a track record of 100% green card approval rate for their investors. Investors who consider the investor green card option need to know the track record of the various programs, and who has successfully prepared and submitted EB-5 petitions with CIS on behalf of foreign clients. The EB-5 investor green card option is rapidly becoming very popular in Britain, not only because the E-2 investor visa option has become so difficult, but because the person is not burdened with the daily management of the business and due to the very favorable exchange rate of the British pound versus the U.S. dollar makes it easier to make such an investment. The major requirement on behalf of the investor is that he/she can clearly document that the investment funds were obtained legally, for instance from savings from a working career, sale of property, inheritance, or by any other legal means. After the investor, upon advice of an immigration attorney, has opted for an investment center, he/she should obtain a due diligence report about the “regional center” from a competent, independent accountant. CIS processing of the initial petition takes about 3-5 months. If the petitioner is in the The initial green card will be issued on a two-year, conditional basis. At the end of the two-year conditional period, another petition will have to be submitted to CIS to remove the condition from the permanent residence. In order to qualify for the permanent green card, both the “regional center” and the investor need to continue to qualify. The funds must still be invested, and the regional center must accomplish the required job creation. The EB-5 “regional center” immigrant investor green card option gives investors peace of mind in the sense that they know that their investment is made in a reliable, government approved program, and that obtaining permanent residence for the immigrant investors is the stated goal of said program. Moreover, after obtaining the conditional and later the permanent green card, the immigrant investors have the freedom to pursue any job or activity of their choice in the For foreign investors who wish to spend at least 6 months per year in the U.S. without visa constraints, and who can afford to invest $500,000 into a “regional center” without a guarantee of specific returns on their investment during that time, the EB-5 “regional center” option is an ideal, relatively uncomplicated way to qualify for the coveted green card that confers upon them the right to permanent residence in the U.S., and eventually, if they so wish, the right to apply for U.S. citizenship. Recent Article for Place in The Sun from Andrew Bartlett Thinking about emigrating or retiring to An increasing numbers of Brits are seeking to start a new life with their family to escape the stress and overcrowding which is viewed increasingly as a feature of life in Many British emigrants comment on all the positive lifestyle issues such as a year round outdoor life, a notable lack of ‘yobbish behaviour’, freedom to walk streets in the evening without always worrying about being in the wrong place at the wrong time, an absence of road rage and a more favourable cost of living etc. Many families who have made the move did so with a view to improve opportunities for their children given the fact that in certain areas the public school system can be as good if not better than anything offered in the UK, although it is important to understand the implications and differences between the UK and American education systems. Over the past few years the Although at first sight the better known E2 visa may appear the cheaper option (many families who use this route expect to spend at least $200,000 on buying a qualifying business) there have been well documented problems with delays and refusals processing E2 applications at the US embassy in London which has led to applicants having to put their lives on hold for many months Finding a qualifying business willing to sell to a British buyer can be a problem, once the owner realises they may have to wait at least a year in many cases for the sale to go ahead, whereas if they sell to an American buyer the business can often be sold in a few weeks. Indeed the problem has become so bad, a number of British E2 applicants have actually bought a business prior to obtaining E2 visa approval rather than risk the owner finding another buyer. Apart from the obvious dilemma that they cannot manage the business in Additionally the choice of Businesses contains the usual mix of good bad and indifferent and if buyers receive poor or unscrupulous advice when buying the likelihood of failure is not a cloud many want hanging over them when starting a new life. Further those already living in the States on an E2 visa are increasingly being called back for interview to On top of all this an inherent disadvantage of the E2 visa is that it does not give permanent residency to your family, with the result that you are always under pressure to maintain the business, raising the dilemma what do you do when you want to retire or indeed what happens when your children turn 21. If they are not still in education, or married to an American citizen they will need own visa coverage or may have to return to the It is interesting to note the comments made by John Caulfield, Christopher Bentley, a spokesman for the United States Citizenship and Immigration Services, said: "the EB5 investment programme is a win, win for everyone’.” It enhances the The rules surrounding the EB5 investment visa were relaxed three years ago to spur investment and create jobs. The change meant investors in specific regional regeneration centres could remain virtually passive, making the scheme more attractive to families wishing to work or retire A United States visa consultant said he was now getting 50 inquiries a month from interested Britons including business people, doctors, dentists, builders indeed covering all areas of life. The EB5 provides the entire Family (including children under 21 at the time of application) permanent residency under green cards. If an application is successful the (petition is granted) the green cards are issued with conditions attached for two years – the conditions relate to evidence the money has been held and not removed, the investment made and the jobs created or at least evidence that the investment is in process,. Although this visa originally required an investment of $1,000,000 there are specific areas designated by the Government where the investment required is $500,000 (£249,000) which has to be held in an approved investment project for two years after which time they can theoretically sell the investment, however the implications of them doing this are rarely pointed out. Successful applicants obtain green cards that allow permanent residency and after 5 years can apply for American citizenship. The $500,000 programme called the EB5 pilot programme is scheduled to end in September 2008 and given 2008 is an election year in The USA and immigration legislation is very contentious there is no certainty the programme will be extended. Although there are only a small number of companies offering investment options for this visa their track record varies considerably and the vast majority of Brits have opted for a handful of established projects .Indeed it is not generally recognised that although there are theoretically 17 different programmes a significant number of those have not been properly activated or have no track record of clients having their conditions removed after two years., a worrying dilemma! There are a number of reasons why it is important to seek independent advice before taking at the first hand all the claims made by the various companies relating to the programmes that promote the EB5 visa. There are a number of areas potential EB5 investors need to be aware of from legal, investment and practical perspectives that are not readily apparent from the various programme details. British applicants in particular have often focused on the investment potential at the expense of the visa implications of the various schemes which may cause them certain problems at a later stage. One of the criteria for the conditions to be removed after two years relates to job creation meeting the required criteria for the EB5. However good the return on investment may be, if a particular project fails to create the required number of jobs there is the real risk that the conditional visa could be revoked. It is interesting to note that investors from other countries have focused on schemes which offer a lower investment return but monitor more closely the employment criteria, which is after all the more critical consideration in having the conditions removed. Another problem is that British visa applicants have little opportunity to verify all the information they are given in some very convincing brochures and documents. There are significant implications relating to key political considerations behind individual programmes, that may not become evident until the times comes for the conditions to be removed A key point to be wary off is that all too often brochures and programmes focus naturally enough on the positives but it is important to obtain an independent perspective to ascertain the negatives as implications can be far reaching but not readily apparent, and don’t expect the regional centres to verify points if you do not know what questions to ask! . For those wanting security and the flexibility to work, run a business or to retire the EB-5 has certain distinct advantages, but there are also some important caveats you need to be aware of. Link to a Daily Telegraph article on Britons retiring on the EB5 visa - click here If you would like to be sent information and brochures on the EB5 options, a report looking at certain options from a leading Florida Immigration practice or would like a briefing with Andrew Bartlett on EB5 alternatives and which Attorneys have worked with UK clients on this visa click here or telephone 0207 096 1227 If you are interested in our comprehensive briefing service for those considering emigration which includes the pitfalls please click here. Andrew Bartlett is an independent emigration, relocation and property specialist; he also writes articles on relocating to |
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