The EB-5 Investor: What Matters Most To Foreign InvestorsJanuary 29, 2021
The families participating in the EB-5 program may choose to immigrate for many reasons, but they usually have one thing in common: they are immigrating for the chance to live their American Dream. Many focus on future opportunities for their children while others choose to immigrate for a prosperous business environment and access to the U.S. economy.
Regardless of the specific reason behind pursuing EB-5, all investors should be aware and evaluate the risks associated with achieving their goals, the biggest of which is not the financial risk (although loss of a significant amount of money is incredibly important), rather it is the risk of failing to achieve the goal of immigrating - and permanently remaining - in the United States.
With over twenty years of experience and over 5,800 families putting their trust in us, CMB Regional Centers has always understood the risks the families face in the EB-5 program and has committed to developing EB-5 offerings that achieve the goals and dreams of the EB-5 families.
Top Three EB-5 Investor Goals
With few exceptions, there are three primary goals of each EB-5 participant and their family. These three goals of utmost importance, and they also must be kept in order of significance to ensure the highest likelihood of success.
These goals are:
- Obtaining permanent residency in the United States (Permanent Green Card)
- Ensuring that their investment is protected with the goal of receiving investment capital back at the end of the process
- Receiving some modest return on their investment.
If these three very specific goals are not prioritized in the appropriate order by the investor or their investment, it is likely to increase the risk of failing to achieve the most important goal, their immigration pursuit. EB-5 investors are nearly universal in their agreement: should they fail to achieve their immigration goal of permanent residence (#1 goal), then the EB-5 investment would not be a success. This is true even if the investor attains a higher rate of return (goal #3) or return of the investment capital (goal #2).
CMB believes that EB-5 is an investment and that the return on the investment amount is the Green Card allowing lawful permanent residency in America. For investors looking to make an investment that will lead to significant returns (ROI), there are much better options outside of investing in an EB-5 immigration offering.
We believe that as a result of how different the goals of each investment are, an EB-5 investment and an investment to achieve significant returns need to be considered separately. If the two ideals are combined into one investment, the goals of the investor and objectives of the investment are likely to compete and work against the one another.
As noted above, the true return on your EB-5 investment is the permanent green card and the opportunities presented by living in the United States. Each investor has their own reason to come to the United States, but each comes with a hope and a dream. This is true whether the reasons are education for children, university for yourself or children, personal freedoms that are unique to America, security, job and business opportunities, retirement, improved weather and climate, or maybe family reunification.
For those interested in a traditional rate of return focused investment:
The principals of CMB have established NHK Capital Partners (“NHK”), an investment platform that leverages successful developers that CMB has worked in EB-5 offerings to create non-EB-5 investment opportunities. NHK focuses on value-driven investment opportunities in the U.S. alternative investment sector to help its investors meet a range of objectives, whether it means capital appreciation or creating a steady stream of ordinary income.
NHK’s current investment opportunity is a JW Marriott hotel in Dallas, Texas. The NHK fund will make a loan for the development and construction of the hotel and will also have a profits participation in the project. This is designed to provide the investors with a stream of ordinary income along with the opportunity for higher returns, typically realized at the end of the investment term. NHK recently successfully subscribed and closed its debut offering: the Augusta Street Lofts project, a 262-unit luxury rental apartment complex in San Antonio, Texas.
If you would like to receive more information on this NHK investment or future investments please contact NHK at email@example.com or visit https://nhkcapitalpartners.com/
Goal Alignment – CMB’s Structure and EB-5 Investors
As an investor considers an EB-5 opportunity, they must make certain that the goals of each party in the investment are clearly understood, and ensure that the goals of the regional center align with their goals. This is why CMB has always offered a debt-based relationship (as opposed to an equity structure) with each target project and developer, which ensures that our goals as a company align with the goals of our investors.
CMB’s structure also assures EB-5 investors that our investment opportunities are not vertically integrated, where the regional center and developer share common ownership and common interests. In a vertically integrated structure, the developer and the regional center have their interests aligned, and (should something go wrong) the investor, more likely than not, has to stand in opposition to both parties.
This is the type of structure the SEC warned EB-5 investors about in an SEC October 2013 Alert Bulletin.
In the CMB model, the conflict of interest found in a vertically integrated EB-5 offering does not exist. As the regional center, CMB’s goals are aligned with the investors. CMB’s role is that of a fiduciary for the investors. As part of that role, CMB will fight on the side of the investor and their family to ensure that the project moves forward, creates jobs, and borrowers meet their obligations agreed to in the loan documents.
Ensuring that the regional center’s goals align with yours is a significant part of your due diligence, but it cannot end there. The same due diligence you perform on the regional center and the offering must be also be performed on the project and developer, your attorney, any agency or third-party promoter of the project, broker dealer, and any other parties assisting in the decision making process. CMB has always suggested that our clients ask everyone involved in the transaction hard questions and make them prove the answer.
Due Diligence Questions to Ask Regional Centers
Investment opportunities exist in the EB-5 marketplace where the attorney, marketing agency, and due diligence firms are all being paid outrageous fees by the developer or the regional center. One of the best questions in ensuring that all parties’ goals are aligned can be found by determining how each party receives compensation. Recognizing that compensation is essential in order to continue serving the client does not mean turning a blind eye to the structure and amount of that compensation.
This leads to important additional questions: Who do those parties actually care about? Who will protect me if the project goes “pear-shaped?” Do they care about the investor families? Do they care only about the money? Am I being referred to a certain project only based on the amount of commission to be paid?
If the agency is being paid a compensation by the regional center, what is their involvement after you subscribe? If they are receiving a fee, what they are they being compensated for? Who do those parties actually work for? Again, if something goes wrong, on whose side will they be – who is to protect your interests?
CMB investors – just like family
CMB has based our entire business around the idea that each one of our investors is part of the CMB family. CMB is a multi-generational family business and we take great pride in getting to know our clients on a personal and professional level.
This means caring for our investors and structuring our deals based on our investor’s goals. It also means being available for our investors throughout the years-long process of investing and immigrating to the United States and finding quality developers and projects that meet and exceed the requirements of the EB-5 program.
Whether you are just beginning the process of vetting the EB-5 program, or you are ready to invest as soon as you find the right opportunity, let a trusted professional help you in this process. At CMB Regional Centers we are ready and able to help, and we look forward to working with you throughout the process.
If you would like to learn more about the EB-5 Investor Visa, job creation requirements, jobs created, or CMB’s current EB-5 offerings, please contact us here to schedule a free initial consultation with a CMB Investor Relations Manager. We can assist you toward your goal of becoming a lawful permanent resident. Get started soon to get on your way of becoming a conditional resident!
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If you would like to learn more about the EB-5 Investor Visa, or CMB’s current EB-5 offerings, please contact us to schedule a free initial consultation with a CMB Investor Relations Manager.
CMB engages Prevail Capital, LLC, a broker-dealer registered with the SEC and a member of FINRA and SIPC, to be the administrative placement agent for all CMB EB-5 partnerships.