An important decision EB-5 investors need to make when applying for U.S. permanent residency by investing in job-creating projects is choosing between Rural and Urban investment categories.
Both categories can benefit EB-5 investors based on their investment goals, whether they aim solely to obtain a green card or seek to profit from their investments.
Their appeal can also vary depending on the applicant’s U.S. immigration status of the applicant.
Benefits of the rural EB-5 set aside investment category
Rural is a set-aside category introduced by the EB-5 Reform and Integrity Act of 2022 (RIA). Set-asides prioritize visas for foreign investors seeking U.S. green cards. The RIA allocated 32% of the annual EB-5 visa quota to set-asides, with 20% reserved explicitly for rural projects.
Investors who opt for set-aside projects must invest at least $800,000, provided these projects are located in Targeted Employment Areas (TEAs). They are areas outside of metropolitan statistical areas (MSAs) or areas bordering municipalities with populations of 20,000 or more.
U.S. immigration attorney Peter Zhang of Origin Law, P.C., says Rural projects appeal to investors seeking expedited processing and a higher visa quota.
“Rural EB-5 projects offer two key benefits: (1) they have double the visa quota compared to urban TEA projects, which reduces the impact of retrogression for investors born in countries like China and India, and (2) they receive priority processing, allowing for faster adjudication of the I-526E petitions,” Zhang said. ”Rural projects often feature diverse business models and job creation strategies, which can introduce additional variables that need careful consideration. Furthermore, due to their location in less populated areas, some rural projects may be more vulnerable to economic fluctuations.”
EB-5 immigration attorney Oliver Yang from Reid & Wise, LLC, adds: “They have a much faster processing time, and they have more quota, so it is likely that an investor will get their green card faster. This is especially important for investors who have age-out concerns. The cons are it is generally considered that rural projects are riskier, and they are usually in an industry that most investors are not familiar with.”
However, Yang cautions that rural projects could have drawbacks from an investment perspective, such as “fewer population, fewer demand, fewer comparable businesses, limited exit options, etc.”
Why do urban projects still appeal to EB-5 investors?
Meanwhile, the Urban category is only considered a set-aside if it qualifies as a High Unemployment Area (HUA) in a Targeted Employment Area (TEA) or an infrastructure project within a TEA. EB-5 investors who choose projects in these urban areas can invest at least $800,000. However, if the Urban area does not qualify as a set-aside, it is not a priority investment area, and the minimum required investment amount rises to $1.05 million.
Zhang notes that urban TEA EB-5 projects generally have more predictable business models and are mostly focused on real estate development in major metropolitan areas. “These locations typically benefit from more diverse local economies, contributing to greater stability in demand,” he says. “The primary drawback of urban projects is that they are subject to a lower visa quota—half that of rural projects—resulting in more pronounced retrogression effects for investors from oversubscribed countries. This leads to a longer waiting period for permanent residency compared to rural projects. However, legislative changes have mitigated the impact of retrogression on the investment timeframe, as investors are no longer required to sustain their investment until the I-829 stage.”
Yang confirms these features make these projects of urban projects more “familiar” to investors.
Factors for choosing rural versus urban EB-5 projects
According to Yang, Rural projects often attract more interest from investors due to their prioritized status. “Since most EB-5 projects are traditional real estate projects, any project that does not fall into this category is less seen overall in the EB-5 industry.”
On the other hand, Zhang believes that investors looking to adjust their status in the U.S. might find urban projects more appealing. The option for concurrent filing allows foreign nationals on any U.S. visa to submit their adjustment of status application along with their EB-5 visa petition. This enables them to stay in the country while their application is being processed.
“This depends on the investor’s current nonimmigrant status in the United States. Concurrent filing offers significant advantages, including employment authorization and advance parole, which provide the investor with the flexibility to live, work, and travel while their petition is being adjudicated, even during retrogression. If the investor cannot file concurrently and must go through consular processing, a rural project may be more appealing due to its higher visa quota, making it less susceptible to retrogression, and its priority processing, which shortens the I-526E petition timeline. Ultimately, however, each project, whether rural or urban, should be assessed on its individual merits and risks.”
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