Funding U.S. Projects with Global Investors: An Inside Look at EB-5 with Jeremy Shackle
Welcome to another episode of the A.CRE Consulting Podcast! In this conversation, Alex Moroz Williams and Michael Belasco sit down with Jeremy Shackle, Principal of Consultancy 619, to delve into the complexities of the EB-5 Immigrant Investor Program. Jeremy, a seasoned expert with over 20 years of experience in real estate development and a specialized focus on EB-5 financing, shares invaluable insights into this niche yet impactful area of commercial real estate funding. With a career spanning major roles, including Senior Director at the EB-5 Affiliate Network, Jeremy brings a wealth of knowledge about leveraging global investor capital to fund U.S.-based projects.
In this episode, we explore how the EB-5 program has become a powerful tool for developers to access affordable financing while creating jobs and fostering economic growth. Jeremy breaks down the program’s structure, from its job creation requirements to its unique position within the capital stack, and discusses its resurgence in today’s challenging market. He also guides developers navigating the program’s intricate compliance requirements while sharing lessons learned from his extensive experience. Whether you’re a developer seeking innovative funding solutions or an investor curious about this pathway to U.S. residency, this episode is packed with practical knowledge and strategic insights.
Jeremy Shackle, Michael and Alex talk about Funding U.S. Projects with Global Investors
Or Listen to this Episode
Resources from this Episode
Episode Transcript
Jeremy Shackle – Principal at Consultancy 619
[00:00:00]
[00:00:10]
Alex Moroz Williams:
Welcome to another episode of the ACRE consulting podcast with, uh, myself, Alex Williams and Michael Blasco. Today we’re joined by Jeremy Shackle, who I’ve known for over a year now, and he’s doing some really exciting stuff in the EB five investment space. So Jeremy is a principal of consultancy six, one nine.
[00:00:28]
Alex Moroz Williams:
Yeah. Which provides advisory and documentation services to clients raising capital under the EB 5 immigrant investor program. Before founding his firm earlier this year, he was a senior director of EB 5 affiliate network, which is a top EB 5 fund manager and service provider. Before entering the EB 5 space about seven years ago, Jeremy spent more than 20 years in the industry.
[00:00:47]
Alex Moroz Williams:
He worked in mortgage banking and managed the development of 150 million of residential and mixed use assets. across the U. S. and Latin America. He earned his undergrad degree in management from the University of Massachusetts Amherst and a graduate [00:01:00] certificate in finance from UCSD. Jeremy is originally from Minneapolis St.
[00:01:04]
Alex Moroz Williams:
Paul and currently resides in Houston, Texas.
[00:01:07]
Jeremy Shackle:
Alright.
[00:01:08]
Alex Moroz Williams:
So Jeremy, thanks so much for coming on, you know, really excited to have you. Um, I think, you know, just to start off, we’d love to just hear a little bit about what is EB 5, you know, how is it used for commercial real estate and where does it fit in the capital stack?
[00:01:22]
Alex Moroz Williams:
Um, and you know, some of your experiences in it.
[00:01:25]
Jeremy Shackle:
Yeah. Well, first, thank you so much for inviting me on. This is, I’m thrilled. This is exciting. I’ve loved your, your website for a long time. Uh, even before we met, you know, like a year ago, uh, I’ve been going to this website for resources. Would you guys provide to people in the commercial real estate space is really, really helpful.
[00:01:42]
Jeremy Shackle:
I got some, some resources that I’ve used over the years, uh, off of the site. It’s, it’s really, really great. So thanks. Thanks to you guys for what you’re doing and
[00:01:50]
Jeremy Shackle:
having me on.
[00:01:51]
Michael Belasco:
Yeah, of course. Appreciate
[00:01:52]
Alex Moroz Williams:
Absolutely. Happy to. That’s
[00:01:54]
Jeremy Shackle:
Yeah, this is this is fun. I’m excited to be here. So EB 5, um, EB 5
[00:02:00]
is something a lot of people never heard of. I had, I’d spent, gosh, a quarter of a century in, in, and around real estate development, uh, which is where the vast majority of EB 5 investment capital goes. And I had never heard of it, uh, until I, you know, got the job that I got about seven years ago. And it’s, it’s very much a niche area of finance. Um, but it’s You know, for, for those who use it, it can be a very effective, um, you know, way of financing a project. So EB 5 is the United States immigrant investor program. It’s the U S version of what a lot of countries have, which you might call the golden visa program. Basically foreign nationals make an investment, significant investment into a private business venture. It doesn’t have to be real estate, but it usually is, uh, make an investment into a, you know, Commercial for profit business venture. That investment must result in new job creation. That’s one of the foundational requirements of the
[00:03:00]
V5 program. And if you think about it, that’s really the political justification for a buy your way in immigration program, which is what it is, if we’re being honest, right? Um, you know, foreign investors make an investment if that investment results in the creation of at least 10 jobs in the United States for people here, then that foreign investor and his or her immediate family qualify for a green card. Uh, that’s, that’s basically what EB 5 is. The program was created in 1990. Uh, it was initially, the first couple of years didn’t get a lot of traction. Uh, that in 1992, the program was amended, uh, to allow, and I’ll talk more about this later, uh, to allow for, uh, a different kind of job creation, uh, instead of, you know, a company having to hire real people, human beings on the payroll as regular W 2 employees, uh, a firm that’s using that foreign capital is able to prove job creation using a statistical method, econometrics formulas. So basically that job creation gets calculated. As a
[00:04:00]
function of a capital expenditures and or be operating revenues. So that changed to the program 32 years ago, really caused to explode and take off. And now, today, the vast majority. Uh, of EB 5 money is going into real estate development projects in some form.
[00:04:20]
Jeremy Shackle:
We do see it go into other types of ventures. I mean, it’s a small segment of that of the market is, you know, people putting money into, you know, just operating businesses. Uh, we do see some of it going into manufacturing and mining and, you know, uh, green energy types of projects as well. Mostly it’s, it’s real estate development.
[00:04:37]
Alex Moroz Williams:
And then what makes this particular program so attractive for real estate developers? And I know we’ve spoken about this a couple of times recently, but why are we seeing such a resurgence of it now, particularly where we are at real estate cycle,
[00:04:50]
Jeremy Shackle:
well, there’s, you know, the United States continues to be like the premier destination in the world. For, you know, people wanting to, you know, have a better life, uh,
[00:05:00]
to, to, or for their, for their, give their kids a better life. So, so immigration to the United States continues to be, uh, a very popular option.
[00:05:06]
Jeremy Shackle:
And look, a lot of other countries have some variation, uh, for their own version of EB 5. Uh, including a number of countries that have, you know, less strict requirements. EB 5 is hard. I mean, getting into the United States under any program is hard. Contrary to what you might kind of hear in the political narrative, it’s actually incredibly hard to integrate to the United States under any program. And that’s, it’s even harder with EB 5 because you have to prove where your money came from, and there’s a lot of other requirements. So despite all that, EB 5 continues to have very high demand. And that demand has only grown. While, you know, it was like five years ago, the investment amount, it had been 500, 000 minimum investment for a long time, then it increased and then it dropped back down again due to, you know, a federal lawsuit.
[00:05:45]
Jeremy Shackle:
And then now it’s back at 800, 000 minimum investment. That’s not a small amount of money, but we still see, continue to see very high demand. So there’s a lot of benefits to, , to having U. S. residency, whether it’s, , your kids being able to, ,
[00:06:00]
attend. You know, public or private universities in the U.
[00:06:02]
Jeremy Shackle:
S. Um, you know, all the business opportunities that exist here. Uh, we see a lot of folks coming just down from Canada, for example. You know, if you look at kind of demographically where immigrant investors coming from, mostly they’re coming from like middle income developing countries. Places where, uh, their economies and industrialized rapidly over the last maybe 30 to 50 years.
[00:06:25]
Jeremy Shackle:
So you have this kind of, uh, perhaps not investor class, but like business owner class. You could people who have some family money now, but political and economic conditions are still such that people are motivated to leave or at least help their kids to leave. And. Many of them want to come, come to the United States. , so that’s even, even Canada, which, you know, you wouldn’t think you’d get a lot of people wanting to leave Canada for those kinds of reasons, but you know, they’re seeing lots of opportunities and you know, the U S economy continues to be, amongst, , the large industrialized democracies, U S economy continues to be, incredibly robust
[00:07:00]
and incredibly attractive, not only for investment, but also for migration, people wanting to come here.
[00:07:05]
Michael Belasco:
So, um, I like to ask in terms of pipeline, there’s there’s money being you. Put into this program by families that want to get in. And then there’s on the other side, and let’s just for simplicity, say these are real estate developers looking for to access capital, is there a pen up line of capital trying to be deployed?
[00:07:29]
Michael Belasco:
Or is it,
[00:07:30]
Jeremy Shackle:
Great.
[00:07:31]
Michael Belasco:
sparse and everybody’s fighting for the same pool? How is that? And how does that work over time?
[00:07:36]
Jeremy Shackle:
Everybody’s fighting for it. For sure. , there’s the EB 5, like as a capital market, EB 5 is really disorganized. There’s not, partly because it’s very small. The EB 5 program is actually not very big. There’s a maximum of 10, 000 EB 5 visas issued in any given fiscal year by the government. And that number, at the moment, that number includes not only the principal investor, but
[00:08:00]
spouse and children. So, you know, a family of four would use up four of those 10, 000 pieces.
[00:08:04]
Michael Belasco:
Oh, so it’s one for, so it’s every.
[00:08:08]
Jeremy Shackle:
everybody who’s in the industry has been hoping. For that to change for a long time, uh, hasn’t yet, but, you know, we’re hopeful. Maybe someday the Congress will pass a law that kind of removes the derivative, you know, spouse and independence from that count. But, , there’s some other changes we’d like to see, to the program as well.
[00:08:23]
Jeremy Shackle:
But that’s the way it is. And. There’s a country cap as well. I’m going to talk about that in a few minutes, uh, that there’s a cap on the number of visas that can be issued to any one country. So, it’s just as a capital market. It’s just not not super well organized. It’s gotten better over the years, but it’s still kind of a wild west in terms of the fundraising that that goes on.
[00:08:42]
Jeremy Shackle:
And that is in part because of it’s just relatively small. I mean, if they were, if it were bigger, you’d see more of the you. Kind of the bigger firms, you know, the Wall Street kinds of firms getting into 85, but it’s just too small for them to really care about, which is, I guess, good for people like me, then, you know, other smaller firms in the industry.
[00:09:00]
You know, in terms of like fundraising, like how do you go about getting the money right? There’s an entire industry globally devoted to promoting immigration through investment. Whether it’s EB 5 in the United States or similar kinds of programs in other countries. Um, and there are lots of firms both in the U.
[00:09:18]
Jeremy Shackle:
S. and overseas that do that. They connect high net worth individuals with those kinds of investment opportunities. Um, So, you know, there are intermediaries who do that, but it’s just super competitive, and I’m sure we’ll talk more about kind of the, what product, you know, what people would need to do to, like, actually have a chance to raising that money.
[00:09:39]
Michael Belasco:
Yeah. Let’s get into that actually. Like what are, what are, you know, a lot of our listeners are probably hearing this and many of them probably had no idea and, you know, it’s probably getting them to perk up a little bit, there’s a new capital source out there for them that they’ve never heard about. And so, you know, what types of projects are. You know, most
[00:10:00]
viable or like what, what would qualify one project more so than another, what sort of like, this is the perfect fit,
[00:10:06]
Michael Belasco:
what makes a good project
[00:10:07]
Jeremy Shackle:
Great question. So, so the, I mentioned earlier that one of the foundational requirements of the EB 5 program is job creation. So the projects that actually work for EB 5 have to create jobs. And I mentioned that that job creation can be calculated as a function of CAPEX, right? So basically, construction costs, certain soft costs, uh, can, you know, we drop those of the projects. Those in those expenditures, those inputs into formulas on that. Those formulas tell us what is this project’s job creation. I’m not going to, you know, get too far into the weeds and you know how that we calculate that. But let’s just say as just round number rough example, , project, , would create 10 jobs per million dollars of construction of hard construction costs. Okay. So, you know, a 10 million project would create 100 jobs, 100 million project would create 1000 jobs. Okay. And then the rule is. The project for business
[00:11:00]
venture would have to create 10 jobs per immigrant investor. So whatever your job count is, let’s just say it’s 837. 256 jobs, well, that project could have as many as 83 immigrant investors. 83 investors times 800, 000 each, that’s your, your maximum BB 5 raise. Okay, so projects got to create jobs. So it’s, it’s. Almost always going to be ground up construction or something with a really substantial renovation. EB 5 does not work to refinance, you know, an existing asset. You know, you see you own something now and you need to recapitalize it.
[00:11:34]
Jeremy Shackle:
You’re bringing in EB 5 investors doesn’t. Isn’t going to work because that transaction isn’t going to create any jobs. Um, likewise, you know, just buying something that already exists, you know, if it’s like a light renovation, paint and carpet kind of thing, that’s just not going to have enough job creation.
[00:11:49]
Jeremy Shackle:
I mean, maybe for like, if it’s a big enough project, maybe for two guys, you can, you know, who are, you know, or partners in the project, you can structures to get their green cards, but you wouldn’t have any kind of scale. You really got to build something
[00:12:00]
or have a really pretty substantial renovation.
[00:12:02]
Michael Belasco:
Now, do temporary jobs count as job creation? Like, uh,
[00:12:06]
Michael Belasco:
or it’s really math on the, on the,
[00:12:09]
Jeremy Shackle:
It’s math. And that’s the beauty of what we call the regional center program under EBFO. That’s the beauty of the program is that all you got to do to create the jobs is spend the money. You just cut the check to the contractor, done. Your jobs have been created. Or for certain types of businesses, let’s just say, uh, it’s the, You know, whatever you build becomes an operating business, like a, you know, hotel or commercial office building or entertainment venue, something like that, then you’re, you can take your operating revenue from that to get additional, you know, to take a year of operating revenues, drop that into the same kind of formula, get additional job creation. So that’s why, like a hotel is good, you know, take that almost the exact same type of building, something that, you know, you build, it becomes a hotel is going to have more job creation and something that you, you know, turn into like condominiums or, you know, studio apartments, something like that. So. But you, that’s, that’s how that job creation happens.
[00:12:54]
Jeremy Shackle:
You just spend the money or in some cases, you know, bring in the operating revenue. The jobs are created. You don’t have to
[00:13:00]
hire any real people, you know, in reality, like people are being hired. People are being employed. That economic activity is resulting in job creation for sure, but , you don’t have to count people.
[00:13:12]
Michael Belasco:
it’s assumed that it’s indirect, right?
[00:13:14]
Michael Belasco:
Even if it’s like an apartment building, you just assume that the fact that there’s more people, therefore, there needs to be more jobs in the area to service these people. I guess that’s sort of the indirect rationale
[00:13:24]
Michael Belasco:
for why you
[00:13:25]
Jeremy Shackle:
Yeah, that that’s exactly it. It’s, you know, if you’ve got a, you know, on our 20 million, typically a typical kind of vanilla 85 project, you know, holiday and express on the side of the freeway near the airport, just. You know, beige box kind of thing. Nothing, nothing very exciting. You know, 20th say it’s got a 20 million hard cost, you know, that, you know, maybe it creates, uh, you know, 185 jobs, well, you know, 1.
[00:13:46]
Jeremy Shackle:
3 of those jobs is the baristas at Starbucks down the street, you know, one of the workers are going to get their coffee in the morning and then you’ve got drivers that are bringing the materials to the site and kind of all the, all the various other. You know, factors of production, you know, they’re kind of inputs to
[00:14:00]
making that happen. All that is captured by that econometric method that, you know, can the consultants use to, to calculate that job creation. So it’s really a great option, but again, you got to spend money to build something. Uh, you know, just, you know, the transfer of ownership or refinancing is not something that’s going to create the jobs that, that, you know, are going to benefit the EB 5 investors.
[00:14:22]
Michael Belasco:
Alex. I know you have questions. I have many because I’m in, I’m in the,
[00:14:25]
Jeremy Shackle:
Yeah. Well,
[00:14:27]
Alex Moroz Williams:
I think my next question is, you know, where does this fit in the capital stack? And it’s, I think we’ll get a little bit more into it on how to source these investors and the lengths you have to go to, to actually get this kind of capital. But, What makes this kind of capital so attractive for real estate developers versus traditional sources, whether it be private equity or debt?
[00:14:46]
Jeremy Shackle:
it’s cheap. I mean, that’s, that’s the only reason anybody bothers with this you know, government program is that it’s a cheap source of capital. Um, and I don’t don’t hold me to any of these numbers here. But just speaking just in generalities,
[00:15:00]
um, you know, for, like, the top tier projects out there. The I mean, there’s some and I’ll talk more about this.
[00:15:05]
Jeremy Shackle:
There’s some, you know, institutional firms that, you know, they’re in the 85 space, uh, raising money to Invest in really, really good, high quality projects, very low risk. I mean, about as low risk as you can get for for investors. Those kind of top tier projects are typically paying investors less than 1 percent per year to use their money, and there’s no other upside.
[00:15:25]
Jeremy Shackle:
In most, most cases, there’s just no other upside for the they’re not. You know, the value of their investment isn’t going to grow if they put in 800, 000 at the end of, you know, five or six or seven years, whatever the term is, they’re going to get back 800, 000. And during that period of time, somebody is basically renting their money for usually less than 1 percent per year.
[00:15:45]
Jeremy Shackle:
Now, that doesn’t reflect the true cost of capital because there’s some, there’s fundraising costs and the overhead costs and stuff, but investors usually getting a very small amount of money for that. That’s the economics of EB 5. That opportunity cost, as economists would say, that opportunity cost is the cost of getting a green
[00:16:00]
card. Well, that, it’s the fact that it’s really cheap money is what makes it very attractive to, you know, project developers.
[00:16:07]
Michael Belasco:
It’s an incredible win win on both. So yes, you’re not getting a huge return, but your return is, I mean, you know what you’re getting. In fact, you can almost say. And every investment, there’s this sort of risk
[00:16:18]
Jeremy Shackle:
Yeah,
[00:16:19]
Michael Belasco:
reward here. It’s like you, you invest, you get through the process that 800, 000, maybe your return’s not huge, but you know exactly what you’re getting in terms of the reward outcome from the money you’re investing.
[00:16:29]
Michael Belasco:
So it’s like, you know what you’re getting. You’re happy to get the lower rate. And then the other side, I mean, the cost of capitals, it’s incredible.
[00:16:36]
Michael Belasco:
And, you know,
[00:16:38]
Jeremy Shackle:
said a key word just now, risk. One of the other foundational rules of the EB 5 program is that there has to be risk, you know, the, the immigrant investors can be offered no guarantee that their money is going to come back to them. Typically, what happens is investors, and there’s different ways to structure this, but typically they come into a fund as a limited partner. That’s, that’s an equity investment for them. And then
[00:17:00]
in most cases, uh, to your question, Alex, uh, that, that. Fund, you know, that that professionally managed, you know, investment fund is then going to make a loan to the project to the developer for their subsidiary. That’s developing the project. That’s typically coming into the middle of the capital stack. In most cases, it’s it’s messed up. Um, we occasionally we’ll see a project where is coming in as senior. Um, that’s unusual. Um, but typically it’s coming in as junior debt, usually not secured by a mortgage against the property. It’s usually not like a second mortgage loan. There might be some other type of collateral instrument on that loan, but it’s in almost all cases coming in as junior debt. We do see some other projects where, you know, EB 5 money is coming in as Essentially senior equity, kind of a prefe type of structure, um, that can be appealing to, to investors in some cases, but they, you know, other factors held equal. They, they tend to prefer debt.
[00:18:00]
Uh, and that, that’s how we usually see it come in.
[00:18:03]
Michael Belasco:
so is it ever, um, never direct. Like there’s an intermediary, there’s a project and there’s an EB 5 investor. It’s never that always to go in through a fund
[00:18:11]
Michael Belasco:
or is that
[00:18:12]
Jeremy Shackle:
it, it, it doesn’t have to be, I mean, you, you could have investors just putting, you know, making an, I mean, one are the rules of EB five program is that they have to make an equity investment, the, the investor as an individual, as a natural person, and they have to invest as a person, you know, as a natural person, not through their own. Business, right? So individual immigrant investors, a person makes an equity investment. That’s the requirement. They cannot simply make a loan, but they can make an equity investment into a fund that makes the law. Okay, so there is that kind of intermediate path of funds that’s happening there. Um, so that’s almost always we’re seeing that structure.
[00:18:47]
Jeremy Shackle:
It’s possible they could come directly into a project. As equity investors. And I do see that once in a while, usually it’s when they would have invested in the project anyway, but like they just, they
[00:19:00]
wanted, they hire somebody like me, uh, to, to help to structure it, to be an 85 investment. So let’s say, yeah, this is, this is my project.
[00:19:06]
Jeremy Shackle:
You know, I’m one of the limited partners in this thing. They were planning to make it like a direct equity investment into it anyways. But Hey, you know, I want to get a green card. I want to give a gift to my kid. Who’s, you know, who’s studying at NYU or USC and wants to get a green card. Um, so. You know, we’ll make this work as EB 5.
[00:19:23]
Jeremy Shackle:
So in most cases, though, your garden variety EB 5 investor is, you know, coming into a fund as a limited partner.
[00:19:30]
Michael Belasco:
so, so how immediate is it that they get their green card? It’s like that money transfers, it’s deployed. Like when is the moment that the green card is granted? Like how did
[00:19:39]
Jeremy Shackle:
Great, great question. That all depends on the government. And, and that answer changed yesterday. Okay. Um, the, and I’m not, not going to make a political statement, but yeah, I will tell you that, you know, we, we do anticipate that. It’s going to take a lot longer starting January 20th for investors to get through the immigration process.
[00:19:59]
Jeremy Shackle:
We saw
[00:20:00]
that happen previously. Um, but 85 is kind of mostly been left from a policy standpoint. 85 has been mostly left alone over the years by whoever’s in power in Washington, D. C. It’s been mostly left alone. Um, but, you know, we’ve seen a big rush of activity. I’ve got about nine calls today. After this, uh, we’ve seen a big, big rush of activity.
[00:20:20]
Michael Belasco:
trying to rush in.
[00:20:21]
Michael Belasco:
Interesting.
[00:20:21]
Jeremy Shackle:
yeah. Everybody’s
[00:20:22]
Michael Belasco:
Yeah. It makes no sense.
[00:20:24]
Jeremy Shackle:
They’re Their applications and to try to get process. So short answer is that it depends on U. S. C. I. S. You know, the U. S. Citizenship and Immigration Services, part of the Department of Homeland Security, which administers the program kind of depends on what kind of resources they have available and how many people they have working on this stuff. Um, historically, from the time up Maybe a year, a couple of years ago, it took maybe two to three years from the time that they made the investment for their application processed and to actually get that green card. A couple of years ago, the Congress passed, President Biden signed, uh, the EB 5 Reform and Integrity Act of 2022, first major legislation, you know,
[00:21:00]
kind of structurally changing the EB 5 program in more than 30 years, that law. Set aside, created new reserved visa categories. There’s now a reserved visa category for projects in rural areas, you know, outside of metropolitan areas. Investors who the law mandates that investors in those rural projects get faster processing of their green card applications. So what I’ve seen very recently is, you know, an immigrant investor could actually have that green card in hand.
[00:21:26]
Jeremy Shackle:
It would been, you know, a year to a year and a half, maybe kind of wide range year to a year and a half. Uh, for investors going into a project, you know, within a metropolitan area, which is where most projects are, um, hence the reason for the law trying to incent, you know, rural investment, uh, most projects are in metropolitan areas, probably still around two years, you know, in most cases. Um, for those investors who are already in the U. S. And a lot of them are, and I’m gonna talk about kind of the demographics of who we be five investors are, um, if you look at the people who are already in the country on like a non immigrant visa, like a work piece or maybe a student visa,
[00:22:00]
um, they’re able to adjust their status, you know, while they’re waiting for approval of the green card. So if they’re here, you know, if they’re working for, you know, some, you know, Silicon Valley, you know, you know, tech company on like an H 1B, uh, they could make this EB 5 investment, and that’s probably like 20 percent of the market right there, uh, for EB 5 investors, you know, they’re, they’re here on an H 1B, you know, they, you know, they make it, make this investment, um, and then they’re, they’re able to get that work authorization, you know, we call it an EAD, uh, red card, uh, get that while they’re waiting for their green card to be approved.
[00:22:30]
Jeremy Shackle:
Okay. Um, and then that, that kind of that allows them to untether from their, their, their software engineer job in, you know, Santa Clara, California, or, you know, wherever, um, and then for, for those folks who are outside the U. S., you know, they have to go through the process of, you know, upon getting the green card approved, then they have to do a visa interview at a U.
[00:22:49]
Jeremy Shackle:
S. embassy or consulate. And, you know, that
[00:22:51]
Michael Belasco:
So all the standard protocols that you would
[00:22:53]
Jeremy Shackle:
you know, the whole, you know, there’s a vetted process and, and you have to do, do the interview and. Yeah, there’s a lot that
[00:22:58]
Michael Belasco:
Does that happen before or
[00:23:00]
after they deploy capital into a project?
[00:23:01]
Jeremy Shackle:
They deploy capital first. They have to prove that they made the investment. They don’t have to prove the job creation right away, but they have to prove that they made the investment. The first thing they do is they sign that subscription agreement, or sign that operating agreement, whatever document makes them an investor, they do that first. Then they put the money in. And then they can apply for the laughs
[00:23:22]
Michael Belasco:
what happens if they get denied, uh, green
[00:23:26]
Michael Belasco:
card and does it happen? I mean, it’s crazy. It’s crazy. It sounds risky in my pod.
[00:23:32]
Jeremy Shackle:
the way to mitigate that risk is to work with a really good immigration lawyer, a really good immigration lawyer. And I know several, a really good immigration lawyer is going to identify those kinds of problems that could cause somebody to get denied. Number one reason for denial is, , inadequate or improper documentation of source of funds.
[00:23:51]
Jeremy Shackle:
The U. S. government is very concerned with that. Where did the money came from? Why do you have 800, 000? Where did you get that? And, and just proving
[00:24:00]
that, you know, depending on where you’re coming from, that can be a challenge, right? Now, if we’re talking about, uh, say an Indian born Canadian, who’s been living in Toronto for 25 years, all of his money’s in the bank of Nova Scotia.
[00:24:10]
Jeremy Shackle:
That’s easy. Right? If we’re talking about some guy who owns a chain of pharmacies in in Lahore, Pakistan, again, you know, all of his cash is, you
[00:24:20]
Michael Belasco:
Yeah.
[00:24:21]
Jeremy Shackle:
not
[00:24:22]
Michael Belasco:
They don’t have the same system set up
[00:24:23]
Jeremy Shackle:
or, you know,
[00:24:24]
Michael Belasco:
track the money. So it makes it very difficult. Wow.
[00:24:28]
Jeremy Shackle:
or whatever it is, however you earned his money, you know, depending on what part of the world that that money is coming from, you know, just based on ways of doing business or just, you know, the level of sophistication of their kind of financial systems. You know, that can be, that can be an issue. So a very good immigration lawyer is going to be able to, you know, determine, you know, is this a problem? Is this person likely to be denied or are there any. Disqualifying background issues. Oh, it turns out you were an officer in the North Korean military. Yeah, that’s a problem.
[00:25:00]
Or, you know, you were, you were convicted of, of narco trafficking. Okay. That’s, that’s probably not going to get you through. Right. So a good immigration lawyer is going to be able to kind of. Help you to determine early if if you’re likely to be facing a denial situation, but then but look if it happens You know if you ultimately get denied some of the bigger projects like like those top tier, you know Offerings out there will have an early release guarantee.
[00:25:25]
Jeremy Shackle:
They’ll You know, have some money set aside or those, these have access to money to let those investors out early to say, Hey, if you know, you’re not getting a green card, we’re not going to make you stay invested for five or six or seven years or whatever the term is. A lot of the smaller projects just don’t do that because they don’t have the resources.
[00:25:42]
Michael Belasco:
And then they’re stuck in with this horrible return on their money and
[00:25:46]
Jeremy Shackle:
That’s one of the biggest concerns. I mean, investors are, look, let me just talk to us quickly, kind of like who EB 5 investors are. You know, I think when people first hear about EB 5 or the movie, they’re just kind of vaguely aware of it. Um, there’s a perception
[00:26:00]
that. You know, EB 5 is a buy your way in immigration program for rich foreigners. And the first half of that sentence is kind of true. I mean, it, you know, it is a, you know, it is kind of an express way to a green card for people who have money. People have their opinions about whether that’s fair or unfair, but, you know, it is what it is. Lots of countries have something similar. Um, the second half of that sentence isn’t really true. Most EB 5 investors are not wealthy in the way that we think of them. You know, wealth, right? They probably, they obviously have some money. I mean, comparatively, they’re more affluent than the average,
[00:26:35]
Jeremy Shackle:
working person, but they’re not, , they’re not loaded, right? We do occasionally see your, , Arabian oil chic, , who can just drop a million dollars into something and almost forget about it, right?
[00:26:46]
Jeremy Shackle:
You know, maybe his kid is, , studying in the US or something. Um, we do see that occasionally, and we do see some really, like, legitimately high net worth. Yeah. People coming into EB 5, mostly no, most, mostly they are what I call, you know, home equity
[00:27:00]
401k millionaires, you know, these are, these are folks who are, they’re piecing it together somehow,
[00:27:06]
Michael Belasco:
working really hard getting, say they’re, they’re planning for this. It’s not just for
[00:27:12]
Jeremy Shackle:
investors are here already, they’re, they’re working and then, you know, we’re talking about 175, 000 a year software engineer, um, you know, working for, you know, You know, some, some tech company on an H1B visa, you know, maybe they own a home, you know, if you own a two bedroom ranch in San Jose, California, it’s probably worth 2 million bucks.
[00:27:28]
Jeremy Shackle:
Right? So you, they, they, they’ve been here for 15 years. I mean, they own a home, they’ve got to be able, they can crack open their, their retirement account. Maybe they liquidate their E trade, you know, tip over the sofa, shake out the change, steal from their kid’s piggy bank in the middle of the night, just whatever they can do to piece together.
[00:27:43]
Jeremy Shackle:
Uh, you know, so they’re, they’re just. Everything they do to get to that 800, 000 to make that investment to get that green card. Because look, they might have two kids that were born here and they are U. S. citizens already. So they’re not, , they’re not going back to
[00:28:00]
Mumbai, right? They’re not going back to Shanghai. Um, they’re, they really want to stay here. So they’re willing to, , put, to go all in, to put everything they have. Maybe they even borrow some money or get some gift money from family to make this happen. So that’s, that’s a significant share of DB5 market right there. Um, these folks tend to be highly, highly risk averse. They I mean, they want the green card. That’s why they’re willing to do it, but they’re highly risk averse. They are, they’re typically not sophisticated investors. They might be brilliant software coders, but they’re not,
[00:28:30]
Jeremy Shackle:
financial analysts, so , they don’t even always have a full understanding of what they’re getting into, but they’re just, they’re worried about the risk of that investment. They’re terribly worried about getting all of their, every dollar of that capital back at the end of the investment term. Um, and in some cases, like they’re actually, it’s costing them more to like have that money invested and they’re making on that investment during that period of time. So this is a big, this is a big deal for them financially. Um, and they are, you know, we, we, we talk about in finance, we talk about a flight to safety.
[00:29:00]
There’s no flight. I mean, they’re just, they’re already at safety, right? That’s all they want is that they want to be absolutely sure. And many, many times I see investors. Yeah, they will forego a higher return. I mean, maybe there’s somebody out there who’s offering, you know, four, five, six, 7%, you know, perfect type of return to them, but they’ll say no to that.
[00:29:22]
Jeremy Shackle:
And they’ll put their money into some big project with, you know, reputable firm that’s only paying a quarter of a percent per year, because. You know, it’s, it’s, they perceive it to be less risky, whether it is or not is another matter, but they certainly perceive it to be less risky, you know, people, it’s very hard for people to quantify risk premium, but they kind of, they can feel it.
[00:29:40]
Jeremy Shackle:
Right. So. I’ve
[00:29:42]
Michael Belasco:
and cents. Uh, when you, when you’re thinking, well, for that it is, but for this specific program, it’s not always dollars and cents. I, Alex, I’ve been like talking, asking a lot of questions. I have three questions on my mind, but I want to kick it back to you. I don’t want to like,
[00:29:55]
Jeremy Shackle:
plenty of time.
[00:29:57]
Alex Moroz Williams:
Yeah. So I’d love to know, I mean, you’ve got a real estate
[00:30:00]
development projects, let’s say it’s got the job requirements, maybe it’s an urban zone or a rural zone, but how would you go about sourcing EB 5 investors? I mean, is this for everybody or is it, um, you
[00:30:11]
Jeremy Shackle:
It is not for everybody. I have spent a lot of time Alex. You’ve heard me say this. I’ve spent a lot of time in the last six years trying to talk guys out of doing EB 5.
[00:30:21]
Alex Moroz Williams:
Myself in
[00:30:35]
Jeremy Shackle:
to the government.
[00:30:36]
Jeremy Shackle:
And there’s some other kind of third parties that have to be involved with this, like fund administration, you know, it’s, you know, you can spend 200, 250, 000 just before you get that first dollar of money coming in the door. Yeah, this is a private equity offering, right? This is not a. You know, this is not, not playtime, right?
[00:30:54]
Jeremy Shackle:
This is, this is a real thing and it has to be taken seriously. And it’s expensive to do it right and to do it compliantly. So,
[00:31:00]
you know, I don’t want to see somebody spend that much money and then not be successful. Um, the hardest part of EB 5, the hardest part of EB 5 is finding investors. And I, I just I’ve heard myself say that so many thousands of times the hardest part of 85 is finding the investors.
[00:31:16]
Jeremy Shackle:
As I mentioned earlier, as a capital market, 85 is really, really disorganized, really highly fragmented. Uh, there’s really kind of 2 pathways. To go about bringing EB 5 money into a project, uh, there are here in the United States, um, a handful of firms. I mean, there’s maybe, I don’t know, a few dozen firms that raise EB 5 capital at scale.
[00:31:38]
Jeremy Shackle:
That’s what they do, right? They’re in the business of raising money. Um, some of them are real estate developers in their own right. So they’re raising money for their own project. And then others are in the fundraising business. That’s what they do. Is identifying recruit foreign investors, pull their money into an investment fund, and then they lend it to a developer.
[00:31:58]
Jeremy Shackle:
You know, they have some type of, ,
[00:32:00]
partnership or relationship there, or they just have continual deal sourcing to find places to invest the money, um, those firms, and they typically go by the name of regional center. And I’m not going to get into what a regional center is, you know, in terms of the program definition, but, you know, regional centers, basically a firm licensed by U.
[00:32:15]
Jeremy Shackle:
S. C. I. S. To. You know, raise capital under the program because you have to be approved to do that right to participate in 85 program. There is an approval process for that. Um, so these regional center firms, these fund managers, um, some of them have, uh, kind of their own kind of internal marketing machine, including the firm that I used to work with, and they have their own internal marketing machine that, you know, you know, makes the phone ring to identify investors and have like an internal team of people who, you know, You know, that those investors and then, you know, uh, you know, get them signed up and I would say most of the firms, though, they’re like these U.
[00:32:52]
Jeremy Shackle:
S. based firms, these fundraising firms that are, are raising money at scale to lend to projects. They are doing that
[00:33:00]
through partnerships with offshore agents, companies and other countries that are in the business of connecting investors with investment opportunities. Those firms mostly not all, but mostly have a country specific footprint. So if you want to raise money in Vietnam, you’re working with an EB 5 agent in Ho Chi Minh City. You know, if you want to find investors in Taiwan, you’re working with a firm based in Taipei, and they know that market. They work that market. So these, you know, these big, you know, U. S. based firms that it might have a few hundred million dollars, maybe more than a billion dollars of EB 5 money under management. You know, they have fairly extensive relationships, so they go out and do the work of actually raising the money, and then they’re going to lend it, you know, to the project. So that’s going to be a higher cost of capital to a developer who’s working with, um, one of those firms. But that’s not even the biggest challenge.
[00:33:51]
Jeremy Shackle:
The challenge is that those firms, anybody who’s actually raising money, I mean, from EB 5 investors and doing it at scale, doing it effectively. Continuously,
[00:34:00]
they are very highly selective about who they work with, and they know what they’re looking for, and they have a very narrow criteria for the kinds of projects they want to be involved in. Number one, like number one criteria, they’re going to want to invest in a project that doesn’t need the money. That’s because the most effective thing you can ever say to a highly risk averse immigrant investor is we don’t need your money, right? This project isn’t going to get built with or without you.
[00:34:25]
Jeremy Shackle:
If you’re trying to fill a hole in the capital stack with, you know, 10 VB5 money and like the project isn’t going to get built without that, that’s going to be a tougher sell.
[00:34:34]
Michael Belasco:
it’s the contingency money. It’s like, we don’t need it, but like, we’ll add your
[00:34:39]
Jeremy Shackle:
It’s the cost of capital. So, hey, we’re going to bring in this money, you know, fundraising happens on a best efforts basis, right? So we’re going to bring this money. It’s cheaper money than, you know, the other mess debt that we might use that reduces the projects. Financing costs makes it more profitable and everybody’s happy, right?
[00:34:57]
Jeremy Shackle:
But the project is going to get built with or without EB 5
[00:35:00]
money. That’s, so these, these firms, these, these U. S. based fund managers, regional centers, that’s really what they’re looking for. It’s like really, really high quality projects, you know, top tier kinds of projects, very low risk, um, that don’t really need the money.
[00:35:11]
Jeremy Shackle:
They just want it because it’s, it’s cheaper capital. Um, that’s, that’s pathway number one to finding EB 5 investors. The other Kind of the second avenue that you might follow to get EB 5 investors is go out and pound the pavement, take the show on the road, right, go out there, find those offshore intermediaries yourself, you know, do events, do presentations, you know, go out, try to get your offering in front of investors. That can work. I’ve seen that work, but it just takes a massive effort. You know, you really have to put in a big commitment of time and money and personnel. Um, that’s something that. I mean, that’s, that’s an investment that pays off over multiple projects over several years. You just got one deal, you’re looking to raise CD5 money for it.
[00:35:53]
Jeremy Shackle:
You’re, you’re not going to raise the money in time. And like your cost of doing that, any
[00:36:00]
savings you might make on the financing, you’re going to spend that on just, just overhead and trying to bring that, those investors in. So, could be a good long term strategy. And there are some, some very good ones. Good real estate development companies that have actually built their own little in house, you know, money machine, but it’s taken them, you know, years to do that and. So at
[00:36:21]
Michael Belasco:
good. Sorry. Keep going.
[00:36:22]
Jeremy Shackle:
this point, I would say, like, you know, for anybody who, whether you’re talking with the U. S. based company, one of these fund managers, regional center firms that might agree to promote your project and raise the money for you, and then basically they manage the money, they lend it to you, or if you’re talking to an offshore agent that’s going to, you’re going to pay them a commission to bring in those investors, they, you know, they want something that can sell. Right. They want something that’s going to be, and not only low risk, but they want something that’s going to be really interesting to their, to their investors. So look, if you’re building, you know, apartments in Dayton, Ohio, or, or self storage in Scottsdale,
[00:37:00]
you know, that’s, it’s probably a great project. I mean, the financials, I mean, the fundamentals on that might be really strong, doesn’t make for a great slide deck, right?
[00:37:08]
Jeremy Shackle:
It’s just not something that investors are going to, I mean, they do want safety. They do want certainty, but you know, they also. They tend to be drawn to the, I hate using this adjective in business, but the sexier projects.
[00:37:21]
Michael Belasco:
So then, you know, based on the cost. So yeah. Okay. Cost account, but, um, the upfront costs sort of negate that in a lot of ways, especially, it sounds like the larger your project, the better off you are. You know, are you, you know, I hear, you know, I think you said 200 that, you know, this
[00:37:39]
Jeremy Shackle:
Let me, let me qualify that.
[00:37:42]
Michael Belasco:
clarify please. Yeah.
[00:37:42]
Jeremy Shackle:
Yeah, it’s a common practice in EB 5 to charge investors and administrative fee or what you might call a subscription fee on top of the investment amount. So 800, 000 investment amount, which you’re going to see in almost every offering memorandum out there is 10%,
[00:38:00]
80, 000 admin fee, many projects.
[00:38:03]
Jeremy Shackle:
I mean, But for those like fund managers, regional centers that actually like their entire business is built on relationships with these offshore intermediaries that need to get paid a commission. Yeah, they’re going to collect that full 80 K admin fee from the investor because that’s going to go right back out the door to pay the agent for the firms that are actually like raising money for their own projects. Um, or they have like their own kind of in house. Marketing machine, uh, they’re going to be more likely to, to reduce that to some lower level or for your guys that, um, you know, they’re just doing their own project and, you know, they, maybe they have, you know, connections to, uh, to, to potential investors they’re typically going to charge. And maybe it could be 40, 000 could be 50, 000. I’m, I’m hesitant to, to have this go out on video because I’m going to get complaints later from my clients.
[00:38:47]
Michael Belasco:
No, that’s what I want to know because they’re, you know, so it’s a range, right? Like,
[00:38:51]
Jeremy Shackle:
It is a range really depends on a number of factors, but in almost all cases, investors are paying. An admin fee on top of the investment amount. So imagine if you got
[00:39:00]
five investors paying 40k each admin fee You’ve recovered that two hundred thousand dollars up front cost, but you got to find those five investors You actually have to sign those people up to to get recover that so you’re gonna spend some money up front But in most cases you can get that
[00:39:13]
Michael Belasco:
let’s say, um, I’ve, I’ve broken ground on my project. become aware of EB, the EB 5 opportunity, but I’ve already broken ground. What is the timing around it? Is it ever too late? What if the project’s finished
[00:39:26]
Jeremy Shackle:
back
[00:39:26]
Michael Belasco:
and, um, you know, you’ve created these jobs and you could replace some of your expense, you know, talk a little bit about that.
[00:39:33]
Michael Belasco:
Like, when is the timing? When is the cutoff? When is it
[00:39:36]
Michael Belasco:
too late?
[00:39:38]
Jeremy Shackle:
These are great questions, guys. Thank you. Um, yeah. So timing does matter in EV5. Uh, you don’t want to be too early. You don’t want to be too late. Um, you know, too early would be like, what did I generally tell the clients that I work with is you want to be too early. You know, your groundbreaking date should be within sight, right? And if you’re still stuck in the entitlements process, especially in a place like California or New
[00:40:00]
York, where it’s just, it could be years,
[00:40:02]
Michael Belasco:
I’ve done that, yeah.
[00:40:03]
Jeremy Shackle:
until you actually get your governmental approvals, um, then you definitely want to wait. Um, you know, if you’re here where I am right now in Texas, where there’s, Very little regulation to be kind of build anything anywhere you want. Um, different, different level of concern as far as that goes. But in any case, you should be pretty confident that you’re going to start construction within like 6 months. I wouldn’t raise money any earlier than that. The big reason for that is that USCIS, you know, the government agency that administers CD5 approves people’s green cards.
[00:40:35]
Jeremy Shackle:
They’re very strict about what they call a material change. Basically, whatever you say you’re going to do in that project application you submit to the government, whatever you say you’re going to do with that EB 5 money, that’s what you need to do. That’s whatever you say you’re going to build, that’s what you’re going to need to build. There can be minor variations. You know, if you say you’re going to build a 102 key Holiday Inn Express, and it’s being 96 keys, fine. That’s, that’s probably not going to be an
[00:41:00]
issue. But, you know, if instead of building a Holiday Inn, you build an outlet mall or a water park, right, that’s, that’s fine. That’s a big change and all your investors green cards are going to get denied. So you really want to be sure that whatever you think you’re going to build, whatever you say you’re going to build is what you actually built. So you don’t want to be too early in terms of like timing. Like once you start construction, you can generally raise EB5 money right up until the last light bulb gets screwed in, right? The rules of the EB5 program allow for bridge financing. So you can fund a project’s construction costs, Using some other source of money, uh, as long as it’s not permanent financing, right? If some other source of money, you can use that, uh, could be like a short term note from the developer or from, you know, bank, you know, bank money, um, you can fund the construction cost.
[00:41:47]
Jeremy Shackle:
Actually, those expenditures can get paid, and then when the E B 5 money comes in later, that E B 5 money can be used to repay that bridge financing. Uh, and that, that is allowed, and that’s, that actually allows some extra flexibility.
[00:42:00]
Because depending on the project, depending on the offering, it can take a while to actually get all that 85 money in because investors are kind of, despite their level of excitement or motivation, it just always takes them longer than you’d like them to because they’re dealing with documenting their source of funds or there’s just some other issue in terms of their green card application that they’re, they just want to hold off until they’re really ready to move forward with it. So, you know, it. You might start talking with a prospective investor and it could be nine months later when he finally, he or she finally signs that subscription agreement and then it’s six weeks after that, that they actually transfer the money. So that’s,
[00:42:38]
Jeremy Shackle:
you gotta, you gotta kind of have a plan in place for that.
[00:42:41]
Michael Belasco:
Yeah, you can kind of see how many issues could arise or either that. Can you take like once the conditions have been satisfied by EB 5 and this, EB5 investor wants to maintain their investment. Are you, is there any regulations or rules? I mean, I imagine not. You could say, sign a new agreement and keep
[00:43:00]
the money in for like permanent debt or like five to
[00:43:05]
Jeremy Shackle:
to know, and investors are sometimes, you know, shaken by this statement, the U. S. government could not possibly care less if an investor ever gets their money back. They don’t care. I mean, personally, the people who are working at USCIS might care, but like, as a matter of policy, the government doesn’t care if investors ever get repaid. Um, all they care about is that, you know, the money, they want to see the money go into the project, that it gets spent to create jobs, and that that investment is continuously at risk. I mentioned earlier, there can’t be any guarantee of a repayment. That’s what the government’s, you know, principally concerned with.
[00:43:34]
Jeremy Shackle:
And you have to follow all the other rules as well. Um, but there’s no maximum term on that investment. You know, your, your maximum term is really governed by market conditions. You know, I remember most DB5 investors are not, you know, they’re not sophisticated investors. These are not, you know, centi millionaires who are used to putting, you know, doing private investments. You know, these people want to get their money back as soon as they can. So you kind of just five to seven years [00:44:00]
is about typical. It’s kind of about that.
[00:44:02]
Michael Belasco:
seven years. That’s a long time. Uh, that could be a different way.
[00:44:06]
Jeremy Shackle:
Um, yeah, typical, typical structures, you know, going to be like the EB 5 loan has a term of five years to start with optional extensions. Um, and in some cases, um, you know, they, you know, they could be longer, but investors don’t really like that. They do typically want to get their money back.
[00:44:25]
Alex Moroz Williams:
And have you seen maybe, you know, once the initial EB 5 term is concluded that maybe they do roll the money back in, but now at more of a market rate return?
[00:44:34]
Jeremy Shackle:
Um, sometimes, uh, sometimes, yeah, you know, again, for your guy who’s like cracking open his 401k and bargaining against his home equity and he’s got a, you know, an 8 percent HELOC. Okay. No, he’s not going to take you up on that offer, but for, you know, you’re, you’re like 10 to 15 percent of the investor market, like these high net worth guys, um, and women that, you know, say, Hey, this is, this is a good project.
[00:44:59]
Jeremy Shackle:
This is a, you know, I
[00:45:00]
can make money on this. Yeah. They might decide to just to stay in it for a longer term, but that that usually no. Hey, that’s,
[00:45:06]
Michael Belasco:
Talk to, talk to us about, um, the bureaucracy and the requirements for the developer that’s taking in the money. Is there reporting
[00:45:14]
Michael Belasco:
requirements? Like, what is it that a developer has to
[00:45:17]
Jeremy Shackle:
have to talk about it?
[00:45:19]
Michael Belasco:
Yeah, I think there’s a lot of listeners out here that are going to want,
[00:45:21]
Michael Belasco:
that
[00:45:22]
Jeremy Shackle:
I, I, I
[00:45:23]
Michael Belasco:
mind.
[00:45:23]
Jeremy Shackle:
am the regional center fund manager. I spent the first six of my six years of my career. That’s what I did. I was in charge of compliance there. And. It, I will tell you that, like, compared to other types of finance, other areas of finance where you’re raising money from people, EB 5 is comparatively less regulated.
[00:45:42]
Jeremy Shackle:
You know, these are, are unreg, these, these investment offerings are not, , registered with and regulated by the SEC typically. Okay, these are either, like Reg D, uh, investors, uh, you know, accredited investors or the Reg S, , that are, , offshore. Investors, so they’re not. So you’re not really dealing with SEC compliance, but you are dealing
[00:46:00]
with USC compliance, which is harder, which has gotten harder in the last couple of years since the Congress passed the President signed that EB 5 Reform Act in March of 2022, um, mostly good things. I mean, the industry needed that, and it was very much the Wild West before it needed to be reined in a little bit and have some additional protections in place for investors, but there’s still. still a lot of improvements that can be made. But from a compliance standpoint, there’s Yeah, there is a bureaucracy to deal with. Um, you know, the folks who are raising the money. Basically, you have to prove to the government, you know, you have to show on an annual basis that, you know, the money is being spent the way that you said you were going to spend it.
[00:46:40]
Jeremy Shackle:
You know, that you, you’ve, you’ve You know, whatever you said in your offering you were going to do, that’s what you did. The money followed the correct path of funds. Uh, and you have to, at the end of it all, you have to prove that that job creation happened. Um,
[00:46:53]
Michael Belasco:
and if you’re doing your job, it’s no problem. I
[00:46:54]
Jeremy Shackle:
yeah, as long as, if you have good advisors, and if you hire qualified
[00:47:00]
consultants, you know, business consultants, and immigration lawyers, securities lawyers, people who know EB 5, and you do what they tell you to do, You’re going to be fine. Where I see problems in EV5 is a lot of these smaller operators that, um, you know, they’re, they’re, they’re not typically in the business of raising money. , or they’re certainly not in the business of raising money. But, you know, they hear about EV5, or sometimes. Some smaller developers, uh, will hear about EB 5 from a project partner, , somebody who’s maybe from another country that says, Hey, I’d like to invest with you, but I want to do with EB 5.
[00:47:33]
Jeremy Shackle:
And I know, I know a few other people from, , my hometown in, , Sao Paulo or Seoul or, , Calcutta, , whatever, um, that want to be part of this as well. Let’s make it EB 5. You know, those firms like they just they don’t they don’t have any internal compliance people. Um, they just, you know, once the money is raised, , it’s money has been raised and money has been spent. They kind of stopped caring about it. And then I have seen a lot of cases in which, you
[00:48:00]
know, because the people who actually raised the money and spent that money. Didn’t follow through like they did. They didn’t do what they were supposed to do in terms of like operating within the rules of the program. Those investors end up getting denied later. I mean, maybe they initially get approved for that green card, but then they can’t. Ultimately, remove conditions on because every new green card holder, uh, you know, it doesn’t matter how you get your green card. Every new green card holder has a two year conditional period. So, for 85 investors, you know, at the end of their two year conditional period, they have to submit a petition to remove conditions on the residency. Um, that petition must include evidence that the jobs got created. It must include evidence that their money was continuously invested in that risk. Uh, you got to show how the path of funds, how their money went into the project, how it was spent. Um.
[00:48:45]
Michael Belasco:
other standard forms to do this, or you just have to submit, I mean, is it
[00:48:49]
Jeremy Shackle:
There are, there are forms, but I mean, the forms themselves are just don’t really cover it. So there’s a, there’s a, there’s a way to do it. Like there are consultants,
[00:49:00]
um, and other folks who can help with that. Um, so there is, uh, yeah, there’s as long as you do, as long as you understand on the front end how you’re supposed to do it, you listen to the people that you hire, um, and then you, you just, you follow that, um, just to give you one example, um, let’s just say you have an investment structure that has, you know, EB 5 investors come into the fund as limited partners, that limited partnership is going to make a loan, make the EB 5 loan to a holding company, And then from that holding company, the money flows down into the project company.
[00:49:28]
Jeremy Shackle:
And there’s some structural reasons that you might do that. Um, and it looks and feels like debt to the EB5 investors, but it looks and feels like equity to everybody else, including the construction lender on the project. Um, in cases in which, you know, they just transfer that EB5 money directly from the fund into the project and they just go around that holding company.
[00:49:48]
Jeremy Shackle:
You wouldn’t think that’s a big deal, but it can be a Big deal. Cause you know, five years, seven years in the future when the investor is trying to remove conditions on their residency, the officer sitting in a cubicle in Washington, DC
[00:50:00]
is looking at that saying, Hey, that’s not what happened. Right. You said you were going to do this and then you did that. And now we’re dealing with it. Now, now we’re dealing not only with just somebody’s green card being denied. You’re talking about a revocation of a previously issued green card and that family having to deport from the United States voluntarily or involuntarily.
[00:50:19]
Michael Belasco:
you can’t understate the importance that you have people’s lives in your hands with them. You have people’s money in your hands too, and you get investors and that’s
[00:50:26]
Michael Belasco:
another, this is different. This is like, you know,
[00:50:29]
Jeremy Shackle:
That’s exactly right. That’s one of the reasons I often try to talk people out of doing EB 5 on the project side. It’s like, hey, this is, this isn’t, this is a real thing. We’re not just, we’re not talking about rich guys who can afford to lose, you know, a few hundred thousand dollars. Um, these are families that potentially could be losing, you All of their money and , their livelihood, frankly, if they get these green cards, if they don’t get approved or worse, if they get approved, and then they lose those green cards later, because somebody didn’t do their job, right? Um, you can be ruining somebody’s
[00:51:00]
life
[00:51:00]
Michael Belasco:
Yeah. Wow.
[00:51:01]
Jeremy Shackle:
no, there’s no solution to that. I’ve had a lot of things across my desk. People will call me and say, Jeremy, this is, this is what happened. Can you help? And they’ll tell them, they’ll explain to me what they did or didn’t do. And they’ll say, what can I do?
[00:51:14]
Jeremy Shackle:
And my answer is always the same. Apologize, right? There’s no solution to this problem. It happened. And those are the consequences. So, yeah, you’re absolutely right. You cannot really understate the importance of. Uh, you know, doing this the right way. Look, compared to a lot of other areas of finance and banking and, you know, the kind of consumer protection laws that exist in other spaces, EB 5 is much, much, much easier. There’s still some things you definitely have to do.
[00:51:41]
Michael Belasco:
Jeremy, this has been amazing. Um, it’s been a really great conversation. Alex, I’ll kick it. Do you have any final questions or want to wrap it up?
[00:51:49]
Alex Moroz Williams:
Yeah. Yeah. I would say, I mean, you know, you’ve been a wealth of knowledge on EB 5, you know, we’d love to hear a little bit about, you know, what you’re doing now in the consultancy space and kind of some of the problems that you can tackle with
[00:52:00]
people.
[00:52:00]
Jeremy Shackle:
Sure. Yeah, that’s a great, great question. So I, I mentioned I spent the first six years of my time in EB 5 space. I fell into it, you know, by accident, like a lot of people do, um, but really, really enjoy this industry. So I spent the first six years with a, a firm that has grown a lot, you know, big, um, big. You know, fund manager. Now they’re, they’re probably, you know, signing up a hundred investors per month. At this point, they’re, they’re got, I don’t know, probably six or seven different offerings out there. Probably the fastest growing firm in the industry at this point, it’s called EV5AN. Um, and I had a great run there.
[00:52:32]
Jeremy Shackle:
I’ve, you know, left us left at the end of March of this year as a senior director. Um, I ran their consulting practice and their, their regional center affiliation business, which basically is providing services to other companies that want to do the same thing. You know, they’d have some connection to investors and they want to, you know, bring in that money and, and, you know. My, my team provided the framework for them to be able to do that. So left at the end of March after a great 6 year run. I still talk to my team there with some
[00:53:00]
regularity. They either call me with some question about something, or I just, you know, call them to check in, see how it’s going. Um, so I’m now, you know, I’m now a consultant. Um, I working with, with firms that, you know, Uh, basically doing the same thing. Uh, most of the clients that I’m working with now are real estate developers, uh, projects of varying sizes, you know, from, you know, probably, I don’t know, 10 million at the very low end, uh, maybe 100 million at the high end, uh, usually, um, they, they come to me and there’s other people who do what I do as well.
[00:53:30]
Jeremy Shackle:
Um, they come to me because they need, uh, Some guidance, they need somebody to take them through the process of, you know, getting really understanding the program to getting the documentation that they need, you know, that EB 5 business plan that the government requires the economic impact study that’s, you know, describes how the jobs are going to be created.
[00:53:51]
Jeremy Shackle:
We talked about that earlier. The legal piece, you know, that you’re going to have an offering memorandum and then the full, you know, structure of
[00:54:00]
entities and agreements to be able to, to have that investment happen. Yes, I’ll coordinate with a securities lawyer to produce that. So I really oversee the whole process.
[00:54:10]
Jeremy Shackle:
If the client comes to me and I said, you know, we’ve got this project, we want to bring in 85 money. Um, If, if they don’t let me talk them out of it, if they say, don’t worry, we’re Jeremy, we’re doing this, uh, say, okay, all right, let’s, let’s take it forward. Um, I will bring them through the whole process. And in some cases they may engage me to, you know, once they have that offering out there and they’re raising money, they may choose to engage me to kind of help them manage it for the long term.
[00:54:33]
Jeremy Shackle:
But yeah, and mostly what I do, um, is that I also do some, some crisis management, like, uh, it’s become very common that. Yeah. Uh, you know, USCIS will send out a, what they call an RFE, request for evidence, or a NOID, notice of intent to deny. You know, one of the, one of the steps in the process, you have to, you know, a project or anybody wanting to raise money has to submit a project application to USCIS first.
[00:54:57]
Jeremy Shackle:
You don’t have to wait for USCIS to approve it to start
[00:55:00]
raising the money, but you do have to get that application submitted to the government. Of a review and sometimes those those applications get either they get rejected or sent back and saying, hey, we need more information and there’s a variety of reasons that that might happen.
[00:55:14]
Jeremy Shackle:
So that’s 1 of the things I can do is step in and say, okay, I know how to fix that. I can get you to an approval. Um, and I, I see other cases as well, where just somebody did something wrong. And now we’ve got to try to fix it. Um, a lot of covid area, a lot of covid era projects, um, didn’t start. Or they were significantly delayed and now what’s getting built is just different than what we’re going to years ago, or maybe they built the same thing, but it’s just the numbers have changed or and now these investors are finally, you know, their green cards are coming up in the queue. Or their applications coming up in the queue, the government is saying, hey, we drove by, um, or we’re looking at Google street view and we don’t see anything there. You know, what’s going on? You know,
[00:56:00]
they’re not the government is not going to give somebody conditional green card approval. If there’s even a small chance that those jobs aren’t going to be created.
[00:56:06]
Jeremy Shackle:
Right? So the project just died, or if it’s just really significantly delayed, that’s yeah. That’s probably result in denial of screen card. So I get calls from folks saying, Hey, help us. We need to try to paint a picture. We need to try to tell a compelling story about what’s going on in this project to try to get get an approval. Sometimes it works. Sometimes I can’t. I’m not a miracle worker, but sometimes that’s depending on what kind of inputs I get. I, you know, I can help to solve that problem to at least get get that approval, at least in the short term. I’ll say, okay, now you have to do what you just told me you were going to do. You actually got to build this thing. Right? So I do some of that. Um, and then I’ve got a couple of big clients that really keep me occupied. Most of the time, uh, real estate developers that, you know, are, you know, I’ve either had done some EV5 work in the past and they’re scaling it up or they’re wanting to make a real serious commitment
[00:57:00]
to actually making EV5 part of their long term financing strategy.
[00:57:03]
Jeremy Shackle:
And they need the expertise to build that business within a business because that’s really what it is. It’s a business within a business. I do. I do.
[00:57:11]
Michael Belasco:
a sign of high integrity when you try to talk people out of doing, of getting them to work with you before you bring them in. I think that’s a great.
[00:57:18]
Jeremy Shackle:
Guys, there’s nothing worse than like seeing, uh, uh, Uh, family get denied, you know, that these people, they, they, they come here because they want to come here, um, and, and have a life here and just to see those cases when they get denied. And I’ve seen a few of them recently, um, you know, especially when it’s late in the process, or maybe they got approved and now those green cards are going to get taken away from them because something didn’t happen the way that it was supposed to.
[00:57:45]
Jeremy Shackle:
Um, that that’s a really hard thing to watch happen, and often there’s no solution. So I really try to do my best to keep that from ever happening. It’s also hard to watch a small business owner, like somebody who’s, you know, not fabulously wealthy, you know,
[00:58:00]
spend a bunch of money on something. And then, you know, have that fail.
[00:58:04]
Jeremy Shackle:
Uh, I just, I don’t like to see that happen. So for me, it’s, it’s a successful day if I get no new business, right? Cause it means I’ve kept people from making the choices. I appreciate it. I’m
[00:58:13]
Michael Belasco:
All right. Well, Jeremy, this has been great. We’re going to add your contact info to this too, on the page. So anybody that’s listening out there, you know, reach out to Jeremy. Obviously he is an absolute expert in this space. Somebody with high integrity, which is someone you want in this space when you’re dealing with crime. Something is risky on both sides, you know, with this. So I think, um, really great to have you
[00:58:35]
Michael Belasco:
on. Thank you for joining us. And I hope to everyone that’s, that’s listening out there. You guys learned a lot. And if you’re interested, um, in exploring this further, there’s probably no better resource than Jeremy.
[00:58:46]
Michael Belasco:
So, uh, Jeremy, thank you so much. Awesome. Thanks a lot.
