Investments can generally fit into one of three models; Steady Regular Return, Long Term Reward or US Green Card eligible. Each has it’s own set of merits as described below.
- STEADY REGULAR RETURN – Typically an investment in a fitness club, or similar, where the NET profits are fairly high from the beginning which allows the investor to recover the principle investment back relatively quickly but with a lesser payout post equity return.
- LONG TERM REWARD – Typically a Real Estate Investment like an Office Complex where intitial returns are low but the rewards are higher on maturity of the business.
- GREEN CARD ELIGIBLE BUSINESS – Strategy is modeled below which could be a mix of different businesses to meet the stringent requirements. Running costs are higher too but achieves full US Citizenship for investor and family whilst still yielding returns. This is covered in more detail on the EB-5 Business page.
The diagram above explains the strategy we adoptfor an EB-5 investment to return the investors equity while still generating an income from the total equity invested. The timeline is as follows (percentages are for illustration purposes only – actuals vary):
- The investor places funds into the business via the Fund.
- Once the business is set up, it starts generating income. From the GROSS income, a preferred return on the outstanding equity is paid to the investor first. In the example above this is 2%.
- From the NET profit, 75% pro-rata is paid to the investor (building up his/her equity pot) and 25% retained by the Fund.
- Once the investors entire equity has been returned via the Equity Pot, the investor will have received a Green Card and the process is complete. The investor may re-invest into the business again but as a ‘regular’ investor.
- Therefore, the strategy delivers the unique benefit for the investor to receive the full principle amount invested back, accumalate interest and ultimately gain a Green Card and Visa to remain in the USA.