EB-5 investors include people from all walks of life; professionals, business people, persons wanting to facilitate a child's education, and retirees. Because the EB-5 visa permits employment in the US, many EB-5 investors become involved in charity or part time work. Simply put, the EB-5 visa gives you the flexibility to do what you want in the USA. If you don't want to actively manage your business, you should consider EB-5. If you have a US citizen parent or child over 21 years of age, you should consider family class visa categories. If you have exceptional skills or are famous you may qualify for a green card based on your skills or fame. If you want to manage your own business, consider L-1, E-2, international manager visa categories. If your goal is to have a green card and not to actively manage a business, it is most often cheaper to utilize the EB-5 category rather than to start and maintain a business.
Caltech deploys immigrant investor capital into local projects that meet program criteria, including job creation. CALTECH primarily focuses on Real Estate Development projects such as hotel, shopping malls, retail, office and residential development.
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CALTECH's business model uses the Limited Partnership structure. Each Limited Partnership owns one building. Your investment purchases an interest in the Limited Partnership. You become a Limited Partner. Your percentage share of the Limited Partnership depends on the percentage your investment bares to the value of the project. The prospectus for each project describes the valuation methodology. The Limited Partnership, managed by CALTECH, is the general partner of the Limited Partnership. The general partner, renovates the property, leases the property, and manages the property. The Limited Partners receive their share of the income from the properties. All investors receive 80% of the profits. In fact, most of CALTECH investors, invest for profit only without an immigration benefit.
A limited partnership combines corporate limited liability with partnership taxation. The limited partnership, formed by filing a charter with a state government, consists of a general partner and one or more limited partners. The charter details the rights and powers of the limited and general partners, percentages of ownership, and distributions of profits. The general partner manages the business. The limited partners are passive investors liable only for the value of their investment. The limited partnership income is taxed at the partner level, not at the entity level.
The regulations specifically allow for pooling of funds by several investors to establish a limited partnership sufficient to qualify all participating investors. The only requirement is that each investor individually must qualify for the minimum at risk capital requirement and new job creation requirement.
The EB-5 regulations require involvement in management or policy making. The regulations deem a limited partner in a limited partnership that conforms to the Uniform Limited Partnership Act as sufficiently engaged in the EB-5 enterprise. Partnership, adopted by most states of the United States, prohibits the limited partner from actively participating in management. On one hand you must be involved in management or policy making, while on the other hand you can't. We resolve this contradiction by granting the limited partners the right, as a group, to oust the general partner for "cause" and to suggest or recommend issues of overall policy. Furthermore, our limited partnerships complies comply with the Uniform Limited Partnership Act.
The United States charges income tax on all US citizens and permanent residents based on worldwide income. Treaties and various exemptions eliminate some but not all of the risk of double taxation. Each state of the United States has its own tax system. All but four states raise revenue through state income tax. Investors should consider the tax effects of becoming a US resident before investing. As a general rule, if you are moving all of your assets to the US you will not have a problem with double taxation. If you will continue working or investing in your home country after moving to the US, a trip to your tax advisor is in order.
The Certificate of Limited Partnership must be recorded with the State of California as a public record. The Certificate refers to a Schedule A of the limited partnership agreement, which lists the names and percentage interests of the limited partners. The deed for the investment property is held in the name of the limited partnership. The deed is also of public record. This means the property cannot be sold, mortgaged or altered without complying with the terms of the limited partnership agreement.
No. By federal law, your investment must be "at risk" for at least 2 years without guarantees or redemption rights. If not, your investment is not considered a "qualifying investment."
As in any investment there is a risk of total loss. By U.S. regulations, all funds must be put at risk. All investors are provided with sound references to permit independent verification of the information contained in the investment prospectus.
Investment companies accept EB-5 investors by placing funds in a trust or escrow account pending I-526 Petition approval. The funds may only be released upon approval of I-526 Petition unless otherwise agreed upon in the Offering Memorandum.
An Escrow Bank Account is a legal, interest-bearing account established in a registered bank to hold the initial deposit in the trust until the completion of visa processing. This type of account is commonly used in the sales of real estate, businesses and personal property. Caltech has established an Escrow Account for the purpose of safely holding an investor’s funds at a leading bank in the United States. Under the agreements entered into with the servicing affiliate, the investor’s investment money is not authorized to be released from the Escrow Bank Account by the bank until the visa I-526 Petition has been approved. This process was created to protect the investor.
The initial cash deposit from the investor is placed in a legal, interest-bearing Escrow Bank Account. When an Escrow Bank Account is established, the funds continue to belong to the investor; however, they are committed to be placed into the investment upon petition approval. The attorney or bank has an agreement with the investor that requires the funds to be released from the account only when the petition is approved by the USCIS.
The most common problem area has been insufficient documentation of the source of funds. Many people try to disclose the least possible information only to have the file returned with a request for further information. It is better to provide too much information rather than too little information. USCIS case examiners require a well-documented source of funds application. Professional assistance from a certified public accountant or tax attorney is recommended.
Yes, provided that any applicable gift taxes are paid. It must be demonstrated that the gift is an actual arm’s length transaction and is a not a mere ruse or that the gifted funds will be given back after permanent resident status is granted.
CALTECH will invest in real estate development projects that it expects can be profitably liquidated, sold or refinanced within a 3-5 year period. The exact strategy used to exit each project investment will be determined based on then available options that, in the opinion of the Manager, will produce the highest risk adjusted returns to CALTECH and its investors. There are numerous exit strategies available to the Fund to provide investment liquidity, including;
EB-5 Program regulations and USCIS rulings require all EB-5 investments be “at risk”. As outlined in the Confidential Investment Memorandum, each investment is specific to its risk reward analysis and pro forma analysis. While CALTECH cannot guarantee a specific rate of return, CALTECH believes it can achieve results consistent with or exceed those of other Real Estate Development project returns.
Each partnership distributes profits to its investors monthly. The distributions are based on the prior month's gross rental income net of expenses. Investors receive a profit and loss statement with each month's distribution. At the end of the year the partnership issues a summary report along with Internal Revenue Service form K-1. Form K-1 details your yearly income and expenses. Your accountant will require form K-1 to prepare your US annual tax return.
Administration Fee: $25,000 ($5,000 non-refundable). CALTECH also charges 20% performance fee from profits upon liquidation and income of the project.
You must prepare complete biographical information for each applicant and the principal applicant must prove the source of the investment funds. To prove the source of investment funds, INS requires five years of tax returns, five years of bank records, proof of ownership in any businesses, financial statements for each business and business licenses. The idea is present a track record of an honest course of dealing. If your capital came from a specific transaction, such as sale of a house, inheritance or gift, you must prove the transaction occurred, by providing an official document, such as a closing statement or contract or other official documents. This is not an exhaustive list. Other documents may be required and vary on a case by case basis.
Processing times vary from as little as a few weeks to as much as six months. We can't predict or promise a particular processing time. You should plan for the entire process to take approximately one year.
A general outline of the application process follows. Your attorney will be able to give you a more complete description.
Step 1) File form I-526 Petition for Alien Entrepreneur with the California Service Center. This petition requests INS to certify the applicant and the investment as eligible for EB-5 visa status.
Step 2) Upon approval of the I-526 petition, (a) if you are in the United States you may apply for Adjustment of Status to Permanent Residence by sending form I-485 and supporting documents to the INS regional processing center nearest your US residence. (b) If you are abroad you must wait for notification from the Embassy in your home country to prepare documents for the visa interview. The purpose of the Adjustment of Status or consular visa interview is to make sure you are not subject to grounds of exclusion, e.g. a criminal past, infectious diseases, etc.
Step 3) Upon approval you receive a form evidencing the approval and as well as a travel document. You will also receive the temporary green card in the mail. If you are abroad you must enter the US within six months of the date of the Embassy approval.
Step 4) After two years, you may file for removal of conditions for your permanent green card using Form I-829. This procedure permits INS to verify that you have maintained your approved investment for the required two-year period.
Family members can interview in different countries. The country of origin or where the family has current ties is the standard interview site. Often one member of the family is located in another country, such as a student attending school in the U.S. The student does not have to return to the country of origin and can adjust status in the United States at the district office of the USCIS.
We believe that it is important for you to have independent legal counsel representing your interests without conflict CALTECH’s skill is in real estate investment. We believe it is better to focus on what we do best, providing the best returns on investment.
Please go to the Bureau of Citizenship and Immigrations Services web site. A direct link to investment visa information is: http://uscis.gov/graphics/services/residency/investment.htm
Yes you should. CALTECH urges prospective foreign investors to please consult their own financial advisors for advice on investing through this program.
We recommend that you retain an immigration lawyer and financial advisor to review the investment opportunity and the source of your investment funds before committing to any investment. If you do not have an immigration lawyer, please feel free to contact us. We can refer you to many qualified immigration lawyers who are experienced and have worked with the EB-5 program. For further information please contact: info@Caltechco.com
