Understanding EB-5 Visa Annual Limits: Navigating Country Caps and USCIS Regulations

Many foreign investors have considered investing overseas to achieve portfolio diversification. Investing in US commercial real estate funds can be a particularly attractive option.  In addition to shifting some assets to stable, US dollar-denominated assets, a portfolio of commercial real estate assets should provide less volatile returns than a single residential home or single asset commercial real estate transactions.

Benefits of Debt Investments

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Investing in commercial real estate debt involves providing loans to property owners or developers. This strategy brings forth several key benefits:

• Predictable Income: Debt investors typically earn consistent interest income from the loans they provide. This dependable income stream can particularly appeal to income-oriented investors, such as retirees.
• Lower Risk Profile: Debt investments are considered less risky than equity investments. As a lender, you have a priority claim on the property's income and assets,     reducing exposure to market volatility.
• Asset-Backed Security: Commercial real estate debt is secured by physical assets, which serve as collateral, providing an added layer of security for investors in the event of default.
• Steady Cash Flow: Debt investments often have fixed interest rates and regular payment schedules, allowing investors to plan their income with greater certainty.

Benefits of Equity Investments

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The Appeal of Equity Investments involves owning a stake in the property itself. Here are the notable advantages of equity investments:

• Potential for Higher Returns: Equity investors benefit from the property's appreciation in value over time. In addition to rental income, they can earn significant profits when the property is sold.
• Diversification: Investing in commercial real estate equity allows investors to diversify their portfolios further as they gain exposure to physical assets that may     behave differently than traditional financial assets.
• Control and Decision-Making: Equity investors often have a say in property management and strategic decisions, allowing for more active involvement and influence over the asset's performance.
• Tax Benefits: Equity investors can use tax deductions, such as depreciation and interest expenses, to reduce their taxable income.

A savvy investor can further optimize their portfolio by diversifying across both debt and equity investments in commercial real estate. This hybrid approach balances stable income from debt investments with the potential for higher returns from equity investments. It is particularly appealing in times of economic uncertainty, providing a hedge against market volatility and multiple avenues for wealth generation.

Advantages of US Private Equity Funds

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Private equity real estate funds in the United States provide an opportunity for investors to diversify in two ways.  First, by diversifying away from ordinary, publicly traded debt and equity securities, investors can earn returns that are uncorrelated to the broader stock market. Second, by investing in a fund with professional management, investors can earn returns that are less volatile than single asset investing while benefiting from the expertise and experience of the management team.  

When looking to invest with a fund manager, consider the track record of the fund as a whole, and the experience of the individual executives on the team.  In your due diligence, understand the investment process of the manager: how do they identify, underwrite, close, and administer individual transactions?  Do they have a meaningful focus based on their experience?  Have they established a successful track record?

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Answering these questions will get you on the path to finding a reputable fund manager motivated to protect and grow your investment. It’s not easy to invest overseas, but with the right knowledge and partner, it can be a very rewarding experience.

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About Peachtree Group

Peachtree Group is an investment firm driving growth with a diverse portfolio of commercial real estate assets and other ventures, with a specialty in hospitality. We’ve executed hundreds of investments since inception with a focus on real estate acquisition, development, and lending. Today, we manage billions in equity, augmented by services designed to protect, support, and grow your investment.

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Peachtree Group has an EB-5 visa by investment program which allows foreign nationals the opportunity to attain permanent residency in the United States. The EB-5 visa program allows you to invest in job creating projects in the U.S. creating a path to a green card for you and your family. The minimum investment is $1,050,000. However, investment in Targeted Employment Areas reduces the minimum cost to $800,000. Learn more about the EB-5 visa by investment program.

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The EB-5 Visa program is a pathway for foreign investors seeking permanent residency in the United States. The EB-5 Regional Center Program stands out because it pools investments in specific geographic areas, stimulating economic growth and job creation.

To improve the administration of the Regional Center Program, on February 5, 2024, a bipartisan group of four US Congressmen introduced the EB-5 Regional Center Program Advisory Committee Authorization Act. Adam Greene, EVP EB-5 for Peachtree Group was in Washington D.C. recently meeting with congressional staffers as part of the IIUSA quarterly fly-in. It was a hectic day meeting and discussing EB-5 with 18 Congressional offices. Here is what the IIUSA delegation explained to the staffers:

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What is the EB-5 Regional Center Program Advisory Committee Authorization Act?

The EB-5 Regional Center Program Advisory Committee Authorization Act, which is supported by IIUSA, would establish an advisory committee inside U.S. Citizenship and Immigration Services (USCIS) to communicate, coordinate, and advise USCIS on administering the Regional Center Program.

The purpose of the Act is to establish an advisory committee to communicate, coordinate, and advise USCIS on administering the Regional CetnerProgram. 

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Key Benefits for EB-5 Investors:

1. Enhanced Transparency and Accountability: One of the significant advantages of the EB-5 Regional Center Program Advisory Committee Authorization Act is the promotion of transparency and accountability within the program. By establishing an advisory committee composed of stakeholders from various backgrounds, including EB-5 investors, developers, and regional center representatives, the act ensures the interests of all parties involved are represented. This increased transparency can provide BE-5 investors with greater confidence in the program’s integrity and decision-making processes.
2. Streamline Program Operations: The advisory committee authorized by this act will play a crucial role in streamlining the operations of the EB-5 Regional Center Program. By providing recommendations on regulatory and policy changes, as well as addressing operational challenges faced by regional centers, the committee can contribute to making the program more efficient and responsive to the needs of EB-5 investors. This streamlining can lead to faster processing times for investor petitions and a smoother overall experience for participants in the program.
3. Improved Impact: Another benefit of the EB-5 Regional Center Advisory Committee Authorization Act is the potential for improved impact of the EB-5 Program. The advisory committee will have the mandate to assess the effectiveness of regional center projects and make recommendations for enhancing their economic impact and job creation potential. By facilitating the development of high-quality projects that align with the program’s objectives, EB-5 investments can offer improved economic impact and greater security.
4. Mitigation of Risks: The establishment of an advisory committee focused on the EB-5 Regional Center Program also presents an opportunity to mitigate risks associated with EB-5 investments. Through ongoing discussion of regional center activities and structures, the committee can help the industry structure investments which comply with EB-5 rules and regulations. This proactive approach to risk management can help safeguard the interest of EB-5 investors and preserve the integrity of the program as a whole.

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The EB-5 Regional Center Program Advisory Committee Authorization Act will help EB-5 investors navigate the complex landscape of the EB-5 Program in the United States. As an officer of IIUSA and a member of the Public Policy committee, Peachtree’s Adam Greene is able to participate in discussions with policymakers as they refine the details of this legislation. EB-5 investors can look forward to potential enhancements that will strengthen their confidence in the program and pave the way for successful outcomes.

For more information on the EB-5 Visa Program or Peachtree Group’s offerings, Contact Us.

About Peachtree Group

Peachtree Group is an investment firm driving growth with a diverse portfolio of commercial real estate assets and other ventures, with a specialty in hospitality. We’ve executed hundreds of investments since inception with a focus on real estate acquisition, development, and lending. Today, we manage billions in equity, augmented by services designed to protect, support, and grow your investment.

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On October 11, 2024 the U.S. Citizenship and Immigration Services, (USCIS), the American federal agency that oversees immigration, issued long-awaited guidance about the investment period (known as the “sustainment period”) required for EB-5, America’s residency by investment program.

The guidance stated that investors may receive back their required $800,000 capital after just two years from investing. While many in the EB-5 world have been waiting for USCIS to clarify the sustainment period requirement, the October 11 USCIS policy leaves open many questions, including whether the guidance itself was issued in accordance with proper procedures required under US law.

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The Official Statute

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The official statute regarding EB-5 was updated with the passage of the “EB-5 Reform and Integrity Act of 2022” (the “RIA)” on March 15, 2022. As with the federal agency administering any official statute, USCIS must write formal regulations under a proscribed process. Only after a formal rulemaking process, which requires a public notice and comment process, do regulations become the rules under which the law is administered.

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While EB-5 program participants have been asking USCIS to issue guidance and regulations, it is not clear that USCIS has the legal authority to change existing rules unless and until it follows the rule making process.  This is especially true in cases where existing regulations can be read as consistent with the new statute, as in the case of the sustainment period.

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The Cause of Confusion

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The cause for this confusion is statutory language in the new law itself.  The law requires that the would-be immigrant’s investment “is expected to remain invested for not less than 2 years.”  The section of the EB-5 law regarding “removal of conditions”, or when the investor has a permanent green card, was edited to eliminate specific wording that the investor “sustain” the investment.  The removal of conditions section, however, allows for an investor to have an extra year, beyond the initial two-year period of conditional residency, to prove job-creation only if they keep their capital invested.

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USCIS Interpretation

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It seems that USCIS interpreted these two provisions to require just two years of active investing.  USCIS went further to require that the initial investment remain in the initial project until sufficient jobs have been created.  However, the new law also provides for “redeployment” if an initial investment is repaid before an investor is qualified to be repaid.

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Remain Invested or Redeployment

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A requirement to redeploy capital is illogical if the initial investment must satisfy the minimum sustainment period and job-creation requirements.  The ability to withdraw capital after just two years seems illogical if the law allows an extra year to prove job-creation only if that capital remains invested for longer.  When the RIA is read in its entirety, the new USCIS guidance does not seem to hold up.

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Investment Timeline Defined

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The question of when the two-year investing timeline starts is also unanswered.  The USCIS guidance indicates that the start date is when the full amount of the investment is “made available to the job-creating entity.” Is this when the EB-5 money is spent? When the loan is closed, but not yet funded?  Can the EB-5 funds be deposited and not used by the job-creating entity?  How does bridge financing affect this calculation? These are all unanswered questions.

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Structuring EB-5

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In conclusion, EB-5 project sponsors must structure the EB-5 instrument responsibly, and EB-5 investors should not just rush into a deal that promises money back in two years. For now, it seems safest to maintain the EB-5 investment in the initial project for at least two years after the full amount of the EB-5 funds have been transferred to the JCE/borrower. Investors should stay informed of ongoing developments about the sustainment period, as this issue is sure to come up, again, in courts or USCIS policy in the future.  More importantly, no matter what may or may not have changed in the rules, EB-5 investors must evaluate the financial and immigration risks of potential investments thoroughly.

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To learn more about the EB-5 Visa program and Peachtree’s EB-5 offerings, fill out our contact form.

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