What are the major EB-5 disadvantages and how can you minimize them?
These are the top 5 EB-5 disadvantages and some ways you can avoid or minimize them:
The minimum investment amount is $500,000.
It's a high investment amount, but in return for investing in the EB-5 Program the investor, their spouse, and their unmarried children under the age of 21 years receive green cards. Many investors borrow funds from their family and friends to meet the requirement.
The minimum investment amount could also be raised if Congress passes reforms.
You want to manage the business yourself.
There are two EB-5 programs. There is the Regional Center Program, in which investors do not actively manage their investments, and there is the normal program, where investors must manage day-to-day operations. If an entrepreneurial investor wants more control over their investment, then the normal program would fit their needs. EB-5 investors can choose the program that works best for their interests.
You have to invest in an at-risk project.
One of the major requirements of the EB-5 Program is that investors must place their capital in an at-risk project. While this sounds intimidating, with the right amount of due diligence, the at-risk requirement doesn't have to cause the investor stress.
There are project developers with strong reputations and great track records for successfully completed projects. It may help if an investor invests in a field they have personal knowledge of.
You have to declare your worldwide income and assets.
Investors can hire an experienced U.S. tax planner before they start their EB-5 process to learn how to protect themselves.
You must reside in the U.S. for 180 days each year.
While it is true that an investor must establish residency in the United States, if they must travel frequently they can apply for a re-entry permit.
For more information about the advantages and disadvantages of the EB-5 Program, send us a message.