You still rely on faith to vote for EB-5, then you are really fierce!
962025/5/6
If you are still considering EB-5 investment immigration, please be sure to read this article. Whether the project you choose can be repaid is largely determined by these six cores!
The first core: Is the project you choose, the guarantee and mortgage mechanism hard or not? !
Generally speaking, there are the following types:
1) Mortgage/Deed of Trust, in which the developer mortgages assets (such as land, buildings or other fixed assets) to the fund company, and the fund company can dispose of these assets to pay you back in case of non-repayment. This kind of property right mortgage focuses on two points:
① What is the liquidity of collateral? Can it be realized when the loan expires?
(2) when the loan expires, the collateral value is worthless?
2) Corporate Guaranty of holding company or parent company, some of which are in the market, and the reputation of the guarantee company is very strong. Have you read it carefully?
① Does the guarantor really have the repayment ability?
(2) is his guarantee unconditionally irrevocable?
3) Equity Pledge, which is the most common guarantee in the market. The borrower takes the company's equity it holds as the guarantee for the loan, but you must pay close attention to these three points:
① How much equity value is left when the loan expires?
② What is the liquidity of mortgage equity? In case of default, can it really be realized?
(3) Is the pledged equity filed in UCC?
4) Escrow or Lockbox. For this kind of guarantee, some project escrow accounts are just furnishings, and the withdrawal right is still in the hands of the developer. If the high-ranking lender has "control priority" on the account, it is difficult to get EB-5 funds back first.
Lao Guo is here to remind you that if this method is really safe, it must:
① Account must be controlled by contract.
② There are clear withdrawal conditions in the contract.
(3) there is a default trigger clause.
④NCE must participate in the withdrawal approval.
The above points are uncertain, and account supervision is a lonely supervision.
5) Assignment of Rents/Contracts, in which the borrower takes the future pre-sale income or rental income as the guarantee of the loan. The key to the implementation of this kind of pledge is:
① The project can really generate predictable cash flow.
② It must be clearly stated in the legal documents that NCE or the lender has the right of direct collection.
③ This works best when used in combination with escrow account monitoring.
Whether it is cash custody or pre-sale income, it can only be written into:
① Legal documents
② There is real cash flow.
3 ③NCE has the right to control the withdrawal, which is called "effective"!
The second core: look at the capital structure and priority!
Find out whether EB-5 funds are "priority" or "bottom"!
1) For example, is EB-5 a Senior Loan, Mezzanine Loan, Preferred Equity or Common Equity?
2) Do EB-5 funds have priority repayment rights?
3) Is there an intercreditor agreement? Are you restricted by the terms of high ranking?
Lao Guo suggested that EB-5 funds should be at the Senior or Mezzanine level as far as possible, and remember not to become inferior funds for other investors!
The third core: Can the project land? Is cash flow forecast reliable?
1) Has the project started? Is there a construction permit?
2) How is the project completion progress? Are the funds sufficient?
3) After the completion of the project, can cash flow be generated stably? Can you cover EB-5 repayment?
4) Is there a pre-sale contract and lease intention for the project? Is there any cash flow?
The fourth core: how do developers pay back the money? Is the exit path clear?
Generally speaking, there are the following exit methods:
1) Asset Disposition
2) Refinancing
3) Cash flow installment payment of the project
4) Shareholder redemption/repurchase commitment
Lao Guo suggested with 20 years' experience in real estate industry that the most stable way at present is: a legally effective repurchase agreement+a clear timetable+the cooperation of a powerful guarantee company.
The fifth core: Do you know the performance ability of developers and guarantors?
1) Does the developer or guarantor have a good performance record?
2) Have you ever participated in a default project?
3) Does the guarantor have sufficient assets and liabilities?
4) Is there a balance sheet? Have you been sued, frozen, or have credit problems?
If the guarantor has no real assets or a new shell company, it is no use signing any more promises!
The sixth core: legal documents are your real umbrella.
You should focus on the following documents:
PPM (Private Equity Prospectus)
Loan Agreement (loan agreement)
Guarantee (guarantee agreement)
Operating Agreement (operating agreement)
Have you read everything in it?
Is the repayment amount, time and path clear?
It is clear that after the breach of contract, the investor has the right to remedy?
Have all the due developers withdrawn their funds?
Or the endless waiting for the loan to expire without any guarantee?
Lao Guo emphasized this point many times. Legal documents are the ultimate guarantee to ensure the right of payment. We must not just look at marketing materials! ! Otherwise, there is only one sentence waiting for you: "Pay back according to the contract!"
Investing in EB‑5 is not based on feelings or luck. Every seriousness of you determines the probability of your future payment!
The first core: Is the project you choose, the guarantee and mortgage mechanism hard or not? !
Generally speaking, there are the following types:
1) Mortgage/Deed of Trust, in which the developer mortgages assets (such as land, buildings or other fixed assets) to the fund company, and the fund company can dispose of these assets to pay you back in case of non-repayment. This kind of property right mortgage focuses on two points:
① What is the liquidity of collateral? Can it be realized when the loan expires?
(2) when the loan expires, the collateral value is worthless?
2) Corporate Guaranty of holding company or parent company, some of which are in the market, and the reputation of the guarantee company is very strong. Have you read it carefully?
① Does the guarantor really have the repayment ability?
(2) is his guarantee unconditionally irrevocable?
3) Equity Pledge, which is the most common guarantee in the market. The borrower takes the company's equity it holds as the guarantee for the loan, but you must pay close attention to these three points:
① How much equity value is left when the loan expires?
② What is the liquidity of mortgage equity? In case of default, can it really be realized?
(3) Is the pledged equity filed in UCC?
4) Escrow or Lockbox. For this kind of guarantee, some project escrow accounts are just furnishings, and the withdrawal right is still in the hands of the developer. If the high-ranking lender has "control priority" on the account, it is difficult to get EB-5 funds back first.
Lao Guo is here to remind you that if this method is really safe, it must:
① Account must be controlled by contract.
② There are clear withdrawal conditions in the contract.
(3) there is a default trigger clause.
④NCE must participate in the withdrawal approval.
The above points are uncertain, and account supervision is a lonely supervision.
5) Assignment of Rents/Contracts, in which the borrower takes the future pre-sale income or rental income as the guarantee of the loan. The key to the implementation of this kind of pledge is:
① The project can really generate predictable cash flow.
② It must be clearly stated in the legal documents that NCE or the lender has the right of direct collection.
③ This works best when used in combination with escrow account monitoring.
Whether it is cash custody or pre-sale income, it can only be written into:
① Legal documents
② There is real cash flow.
3 ③NCE has the right to control the withdrawal, which is called "effective"!
The second core: look at the capital structure and priority!
Find out whether EB-5 funds are "priority" or "bottom"!
1) For example, is EB-5 a Senior Loan, Mezzanine Loan, Preferred Equity or Common Equity?
2) Do EB-5 funds have priority repayment rights?
3) Is there an intercreditor agreement? Are you restricted by the terms of high ranking?
Lao Guo suggested that EB-5 funds should be at the Senior or Mezzanine level as far as possible, and remember not to become inferior funds for other investors!
The third core: Can the project land? Is cash flow forecast reliable?
1) Has the project started? Is there a construction permit?
2) How is the project completion progress? Are the funds sufficient?
3) After the completion of the project, can cash flow be generated stably? Can you cover EB-5 repayment?
4) Is there a pre-sale contract and lease intention for the project? Is there any cash flow?
The fourth core: how do developers pay back the money? Is the exit path clear?
Generally speaking, there are the following exit methods:
1) Asset Disposition
2) Refinancing
3) Cash flow installment payment of the project
4) Shareholder redemption/repurchase commitment
Lao Guo suggested with 20 years' experience in real estate industry that the most stable way at present is: a legally effective repurchase agreement+a clear timetable+the cooperation of a powerful guarantee company.
The fifth core: Do you know the performance ability of developers and guarantors?
1) Does the developer or guarantor have a good performance record?
2) Have you ever participated in a default project?
3) Does the guarantor have sufficient assets and liabilities?
4) Is there a balance sheet? Have you been sued, frozen, or have credit problems?
If the guarantor has no real assets or a new shell company, it is no use signing any more promises!
The sixth core: legal documents are your real umbrella.
You should focus on the following documents:
PPM (Private Equity Prospectus)
Loan Agreement (loan agreement)
Guarantee (guarantee agreement)
Operating Agreement (operating agreement)
Have you read everything in it?
Is the repayment amount, time and path clear?
It is clear that after the breach of contract, the investor has the right to remedy?
Have all the due developers withdrawn their funds?
Or the endless waiting for the loan to expire without any guarantee?
Lao Guo emphasized this point many times. Legal documents are the ultimate guarantee to ensure the right of payment. We must not just look at marketing materials! ! Otherwise, there is only one sentence waiting for you: "Pay back according to the contract!"
Investing in EB‑5 is not based on feelings or luck. Every seriousness of you determines the probability of your future payment!
