What Potential Issues Can One Face When Renting An EB-5 Regional Center?

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Let us say you find out that the regional center either sponsored the project, rented their own project, any of the foregoing and the project was denied, in other words, Immigration saw there was a flaw in the project for EB-5 funding. If you find out a project was denied, you would not want to associate yourself with a regional center that has a denied project or a project where they have lost money in some previous project. So in answer to some of the questions that I had given before on past lawsuits or criminal convictions, obvious things that if you get negative answers, then you would look someplace else or bite the bullet and if there was no other regional center, then either you take the risk via a business decision or you delay your project, then you file for your own.

How Does A Renter Get Information On How Many I-526 and I-829 Approvals They Need?

Unfortunately, there is no database that Immigration has relating to regional centers approval or denials. It certainly is one of the questions that would be on my list as asking how many approvals have they had on past projects of either the I-526, which is the initial filing form for 829s when you are filing for removal of conditions to get a permanent green card. So, if there are any denials of these, you want to know why and then also have second thoughts about renting that regional center. If you have any question, let us say they said everything is approved. You probably want to do your own Google search on the internet to see if there is anything negative that is in the internet about a particular regional center or the project because you can be sure if there was, somebody would have written about it. So, that is just a backup.

Is Renting A Regional Center An Affordable Prospective For The Investor?

The question about affordability really has to do with what a regional center is charging and that is, in my experience, I have never had a client who could not incorporate the expenses of renting a regional center into the numbers to make the deal profitable for them. My experience is that unless there is a regional center that is really trying to dodge someone and I have not had that experience, thank Goodness, that the costs, generally even though they may be meaningful, have not stopped a client from renting.

Are There Generally Any Upfront Fees Involved?

Yes. In all the projects that I am familiar with and those that I have been involved in, there are always upfront fees and it really depends on the size of the offering. What I mean by that is if the project is a $10 million project for EB-5, where basically you need twenty investors that are half a million each to equal $10 million dollars, then the upfront fees and other fees are substantially less, than if you are doing a $50 million project or if you are doing a $100 million project. So, it is a sliding scale; the more your project is, the more in upfront fees you will have to pay and also you will have to pay for investor fees too once you file.

Does The Regional Center Charge Per Investor?

Yes. In other words, the way it generally works is there are three levels of charging. There is the upfront fees they charge per investor as of the date of filing the I-526 and then a maintenance fee by year. To do a project, a rent, and that is renting for one year, you are renting for a project that is going to take five, six years for people from most countries to get their permanent green card. It may take two years to get their two year green card, their conditional green card and two years later, they file for removal of condition and that is another year and a half to get that approved. So they are going to be tied into the regional center, which has to do a yearly reporting, yearly upkeep with Immigration relating to anyone they rent to, so yes, there is a certain fee.

If you have Chinese investors, then probably it is going to add another six years because there is a six year plus backlog now for Chinese investors. The point that can really be substantial and what you really have to factor in, is where your investors are from as to how long you are going to have to pay this maintenance fee, the renting or the backlog. Which just started really to get bad in the last few months, started deteriorating in May of last year, so the renting of regional centers to developers who are getting their funding in China and eighty-five percent of all cases are from China, so most are, and they want to really negotiate that maintenance fee very carefully because that could eat into your profit.

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