Home » Usa » Regional center investment

Regional center Investment

                                    MEMORANDUM

 From:             Richard Scholnick

Re:                  Immigrant Investor Regional Center Programs

 There are several initial decisions that an investor must make before choosing to participate in the investor immigrant program.

 First, is it important that the investor makes a decision as to the importance of being able to receive back his investment if he is refused a visa for any reason or if the investor makes a decision at some later date after submission of the documents that he/she wants to withdraw their application/petition.

 Two of the Regional Center programs do not permit a refund of the investment under any circumstances.  Some investors may find it acceptable to make a good financial investment without regard to the issuance of a Green Card.  Others will not be interested in an investment that does not guarantee the issuance of the Green Card for the investor and his/her spouse and minor children.

 Two of the Regional Center programs do not expect there to be a significant return on investment.  The investor must decide if receiving a financial return on his/her investment is important or if the investor is really just interested in obtaining a Green Card and would be satisfied with a return of the investment with little or no return more than 5 years into the future.

 Regional Center programs are very popular both for foreign national investors as well as American citizens/residents.  The programs close quickly since each program has a certain amount of money needed to fund the investment.  Accordingly, the available programs change frequently so it is impossible for us to describe a program that is currently open for investment until we know if the investor is prepared to invest his/her funds in the very near future.  As a result of programs closing and new ones opening, we cannot offer details on the precise programs available until we know when the investor is prepared to place his/her funds at risk.  For example, a client might say that he is willing to place his funds at risk within the next 2 months.  In such a situation, we can identify investments that meet the client’s requirements.  On the other hand, if the client says he is prepared to make an investment in 6 months, this would be too long to assess an investment since many of the Regional Center investments will be closed in 6 months.

 

The investments are typically in the form of limited partnerships or limited liability companies.  Each partnership/company will have an experienced management team that operates the investments.  Some permit the investor to have an active role in policy decisions while others restrict the business operations to a set formula.  The typical investment is approximately $520-550,000 including commissions to consultants, legal fees, government filing costs and miscellaneous expenses such as overnight mail etc. The general benefits to the investor immigrant program are outlined in a separate memorandum that is attached to the e-mail supporting this memorandum.

 

We can offer some generic investments that will give the investor a good sense of the type of projects that are/will be available.  The following are 3 scenarios that are typical investments offered by the Regional Centers:

 

  1. A 4 season resort that has been in existence for over 50 years has a wonderful expansion plan.  It has the most sophisticated and up to date ski equipment, snow making capacity, abundant ski trails, championship golf course and an incredible overall recreational facility.  The management team has had enormous success in operating this resort for over 20 years.  The investment is an expansion of an already successful resort.  Several phases of the investment will be funded by new investors.  An initial expansion of hotel space, new health spa, an indoor water park and large conference facilities will be built in the first phase.  The resort has found that even as a winter only facility that demand far exceeds supply of hotel space and recreational activities.  The expansion is intended to meet existing demand not anticipated future demand.  If a Green Card is refused for any reason, the investment will be returned with a small penalty.

 

  1. A highly technological and successful program of building and operating the latest and most fully equipped dairy farms.  The operation team of each farm must invest at least $500,000 in the project and in many cases more than $500,000 is invested.  The state sponsoring the program has had wide scale success in developing dairy farms.  Indeed, the program was originally started with no investor immigrants.  It was initially a straight forward investment made by US investors.  The dairy farms that were created in 2001-2002 have all enjoyed annual profits once they became operational and several have already been sold at a profit.  Some of the projects have up to 60% debt from low interest bank loans sponsored by the State while others have essentially no debt whatsoever.  This has been a very popular program for European dairy farmers that have had success in operating their family dairy farms in Europe and are now expanding their management to the USA.  All money invested by immigrant investors is returned if a Conditional Green Card is not approved.

 

  1. A real estate investment that relies upon acquiring aging industrial properties, making improvements and offering rental to prospective tenants at below market interest rates.  The properties are debt free, which makes the transactions quite secure in terms of invested capital.  The managing partner has been successfully operating and renovating projects of this nature in the same locality for over 15 years.  The investments are located in a large American city that has experienced enormous growth and a huge revival of economic activity.  The occupancy rates in this geographic location are in excess of 97%. Over the past 20 years real estate in this area has increased in value at an annual rate of 7% per year compounded growth.  Rents have increased in accordance with property values.  These investments are very similar to the sorts of properties and success that has been experienced in the Market Street area of San Francisco, the Docklands area of London and the Daiba area of Tokyo.  The transition from industrial usage to mixed use (commercial, residential and office) results in significant increases in land value thereby having high growth for an investor.  The management company has had a long and successful history of selling and operating properties at a profit.  However, these investments are not refundable if the investor fails to receive a Green Card or wishes to withdraw at any time.  The investments are immediately at risk.