The EB-5 visa program is designed to attract foreign investment in projects that create jobs for U.S. citizens. The federal program has been criticized because it allows rich foreign nationals to purchase residential property and achieve permanent residency status for themselves and their families. Immigration attorney Matt Schulz said if done right, it can be a win-win for both sides if the investment creates jobs for U.S. citizens, especially in poor areas.
Speaking to over 60 REALTORS® at the Silicon Valley Association of REALTORS®, Schulz, who is with the Palo Alto global law firm Dentons, said foreigners applying for an EB-5 visa must invest $500,000 to $1,000,000 in a new business approved by the US Citizenship and Immigration Services (USCIS) that will create at least 10 jobs. Upon approval, a foreign investor receives conditional U.S. residency. Permanent residency can be granted after two years if the employment objectives are fulfilled.
Schulz distinguished between two types of EB-5 visas. The Individual EB-5 requires direct investment in any for-profit business that creates at least 10 full-time jobs for U.S. workers. The Regional Center EB-5 visa requires investment in USCIS-approved regional centers creating at least 10 direct or indirect jobs per investor.
Schulz said educating their children is the main motivation for seeking this type of visa. "The incentive for most foreign investors, especially those from China, is schooling. Getting their children in school at the junior high level preferably," said Schulz.
Those from other countries, like Mexico, want their children to live in a safer environment. There are also affluent foreigners who want to diversify their assets.
Schulz said China is currently the biggest source of EB-5 visa seekers, followed by Vietnam. A number of EB-5 visa holders come from Canada.
There have been many successful businesses and projects created by the program, like hotels and restaurant franchises. Schulz noted a law firm or tech company would not be feasible because these businesses would not yield high returns due to high salary requirements.
Since it was launched in 1990, the EB-5 program has gained popularity from foreign nationals seeking permanent residency in the U.S. The program almost reached its limit of 10,000 visas per year for the first time in 2013.
The program also has been a target of controversy. Real estate developments by Jay Peak ski resort in Vermont are currently being investigated by the U.S. Securities and Exchange Commission. It is alleged that foreign investors too keen on receiving their green card don't monitor return on their investments closely.
The EB-5 program has been continually revisited by lawmakers. For now, the program has been extended until September 30, 2016. Reform measures are currently being considered by House and Senate leadership.
Schulz stressed while the main goal for this type of foreign investor is residency, it is only granted if the EB-5 visa project fulfills its job creation requirements. "The foreign investor needs to have business skills and submit a detailed business plan which can qualify and be approved. The best model is one that creates jobs. They need to be extra motivated in having these businesses succeed if they want to get their green card," said Schulz.
Real estate agents who have foreign clients interested in obtaining EB-5 visas and purchasing property in the U.S. should refer them to experts, including immigration and tax attorneys, who can advise them on the next steps, said Schulz.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
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