With growing international interest in the state’s real estate market, Texas REALTORS® are working with more foreign clients, some of whom may be investing in property as a part of their visa process. Commercial practitioners may encounter foreign investors looking for a place to start a new business, and while the purchase of a home doesn’t qualify as an investment for visa purposes, residential specialists can also benefit from understanding the processes that allow their foreign clients to reside in the U.S.
Here, Dallas-based immigration attorney Brent Huddleston answers common questions he gets from Texas agents and explains what you should know about two common visa types foreign investors may use to stay in the U.S. or gain permanent residency.
Texas REALTOR®: You’ve spoken to Texas REALTORS® before, and one of the most common visa types that you’re asked about is the EB-5 visa, which grants permanent resident status. How does a foreign investor go through the process?
Brent Huddleston: The processing time to get an EB-5 petition approved is about two years. You have to show the required investment was made, that the source of funds was lawful in the applicant’s home country, and that jobs were created or will be by the end of the conditional period in two years. Once the EB-5 petition is approved, the foreign national can apply for a conditional green card. In the 90 days before the conditional green card expires, the foreign national files a petition to remove the conditions and submits proof that the jobs were created and the investment was sustained throughout the conditional period. If approved, the foreign national will receive an unconditional green card allowing him or her to live and work in the U.S. permanently.
Are there types of real estate investments that don’t qualify for an EB-5 visa?
There’s a misconception that you can purchase a home. It wouldn’t work for an EB-5 application. It’s not a commercial enterprise. It’s not producing a good or service or employing anyone. You could start a company that manages rental properties.
- Establish a new commercial enterprise in the United States, which means a for-profit, lawful business. (Owning a personal residence does not count as a commercial enterprise.)
- Meet the minimum
- $1 million in general
- $500,000 in a targeted employment area (TEA), which is either a rural area or an area with high unemployment.
- Create 10 new jobs for qualifying employees.
Are the wait times different by country?
When any one country uses more than a certain percentage in any one visa category, a backlog results. The EB-5 was popular for a while because there wasn’t a backlog for anyone. Now a backlog exists for China and Vietnam. Right now, if you look at the Visa Bulletin—a publication of the State Department—it only indicates about a four-year wait, but the indications we’re getting is that the wait for Chinese nationals might soon be 10 years.
Can a passive investment count for an EB-5 visa application?
There are two options for the EB-5 visa: direct investment or going through an accredited regional center, which bundles investments to fund projects. For direct investment, the applicant must be actively engaged in the business and show that 10 people have been hired. With a regional center, the investment can be passive, where the center is responsible for funding projects and documenting that the required jobs, which can be induced rather than direct hires in this case, have been created.
Another visa used by foreign investors is the E-2. Can you explain the difference between it and the EB-5?
The E-2 is a temporary visa that can be renewed indefinitely. While a green card allows for unrestricted employment and travel, the E-2 has restrictions that must be met to keep and renew the visa. The E-2 is also treaty-based, so the investor’s country of origin must have a treaty with the U.S. So, for example, a Chinese investor who wanted to avoid the long wait time for an EB-5 could not use the E-2 because China does not have an E-2 treaty with the U.S.
What are the benefits of an E-2 visa for the investor?
An E-2 visa can be processed in a matter of months as opposed to the years-long process for an EB-5. It also doesn’t require as much of an investment. Instead of the set dollar amounts of the EB-5, the requirement is however much is needed to get the business that’s the subject of the visa application up and running. There’s also no set requirement for the number of jobs that must be produced—just that the business not be marginal, or only able to provide a living for just the investor.
Are there other requirements for the E-2 visa?
The investor is required to direct and develop the enterprise that’s the subject of the visa application. Buying land and sitting on it and watching it appreciate would not be a viable E-2 application. But buying a shopping center where there’s management involved could be viable.
Have there been any changes to how either of these programs work?
There’s an impending deadline for the EB-5 to be renewed on September 30. It has been renewed with some changes in the past, but in the last couple of years there’s been some anticipation of changes, including an increase of the minimum investment amount.
The E-2 has stayed relatively constant other than a toughening of the adjudication process, which is where an immigration officer determines if the requirements are met. We’re seeing officers insist that the business already be operating, which can be difficult if the investor is applying from abroad.
Are there any considerations for a real estate broker who connects an investor with a developer for a commission?
Before accepting a fee from a developer or regional center, a broker would want to make sure it’s acceptable under securities law. Also, be clear in disclosing the nature of your relationship with the developer or regional center to the foreign investor.
Is there anything REALTORS® should keep in mind when helping those with EB-5 or E-2 visas purchase residences?
I see logistical issues come up around closing. A person who holds one of these visas has documents that mean different things. For an E-2 visa, it may have a term of a year, but if the investor is from Mexico, another document could be good for two years. REALTORS® may need to educate themselves on these documents to be able to explain to other parties what they are and what they mean. In some cases, investors should apply for renewal early to get a longer visa term. It’s also helpful to find out what immigration-related documents might be needed or could be obtained early in the process.