What are the issues with residential real estate EB-5 projects?

First, it must be determined that the real estate project will be in a targeted employment area to qualify for the reduced investment of $500,000. Second, the project must create 10 direct, full-time jobs sustainable for at least two years. Please consult an experienced EB-5 immigration attorney.

In a word: jobs. Hotels can count construction jobs and operations jobs, while residential development would probably only be able to count construction jobs. However, with the right EB-5 attorney, like our law firm, a project would be reviewed for approvability and compliance with the regulations.

The Issue is almost always proof of job creation, and sometimes these projects have issues relating to guaranteed redemptions.

Hello. This is a very complicated question. But, if the developer is relying on construction expenditure jobs for the job creation, there should be no issue. And, in fact, many of these projects are coming online.

A residential realty project can work but if the investment is $500,000 it must either be recognized as a Regional center project or exist in a TEA. The hotel projects are more popular as it is easier to show the employment creation both directly and indirectly as well as the stability of investor take out upon refinancing.

The main issue will be whether enough full-time permanent jobs can be created. Also you can only do the $500,000 vs. $1 million if the project is located in a Targeted Employment Area.

There is nothing wrong with residential real estate projects. While there are certainly more EB-5 hotel projects, some of the relevant reasons for the popularity relate to marketing, location, etc. In terms of relevant issues with residential projects, the largest concern job creation. Construction jobs are usually the path of job creation with real estate projects, be they hotels, hospitals, homes, etc. Given that construction will last at least two years and assuming the project is sponsored by a regional center, the Developer will be able to count direct, indirect and induced construction jobs. There will likely be little to no operations jobs unless the Developer is creating a community of sorts and will employ staff to rent/sell the homes. A critical issue would be ensuring that the Developer can support the two-year construction period which will allow him/her to count the direct construction jobs. Since it will involve construction of 150 homes, that may be possible. It is also important to understand that while EB-5 dollars can be used for the purchase of land, the land expenditure itself cannot be counted towards job creation. For example, if the total project costs $200 million and the land purchase is $50 million, only the "qualifying" expenditures associated with $150 million can be applied towards job creation. That being said, there may certainly be other issues to examine; however, without reviewing the project, I, of course, am unable to opine. My firm has worked on many residential projects and I will be happy to offer you a complimentary consultation.

For a non Regional Center EB-5 project, it is difficult to do residential construction because it does not create any direct jobs. For a Regional Center project, the indirect and induced jobs from the construction can be counted.