Comment: EB5 Agent Costs and ROI to Investors

The new 2020 EB5 market is different from 2019 because of two readily understandable reasons: Firstly, the new TEA definition has reduced the number of projects currently in the market and secondly, the raising of investment amount to $900k reduces the number and kinds of investors interested in EB5. Many projects have reached out to us asking about two specific characteristics of the new EB5 market: EB5 Agent Costs and ROI to Investors, what we have discerned appears herebelow.


EB5 Agent Costs:
  • Korean agents have apparently banded together and appear to be sticking to their demand for a $90k fee plus backend points. This is not the case with Chinese and Vietnamese agents, who are not yet unanimous on a number. Projects may be able to play agents against each other in these countries for a deal for $50k fee plus backend points. Projects may want to hold firm to $50k plus backend points, because otherwise investors may balk at a $90k admin fee. Note that the backend points will be more in $ terms because of the higher investment amount, so the agents will be getting more money anyways.
  • In India and other countries, outside of the four far eastern countries, there is no developed agent infrastructure so it should be possible to stick to $50k agent fee plus backend points. In the past, projects have used higher admin fees and/or higher backend points to attract more agent interest, but while that was true of the $500K market, the $900K market may behave in an opposite fashion since there logically has to be a point beyond which admin fees will face push back from investors.
ROI to Investors:
  • Somewhat to our surprise, we have found that there are projects in the new EB5 market that are offering relatively high investor returns. As opposed to the traditional 0.5% to 2% returns on EB5 investments, we have noticed a few projects offering 6% to 12% returns in the new EB5 market. Is this a fad? We don't know. Is this people trying to capture the market with a high return as an experiment to test the new market? We don't know. Will the strategy of offering aggressive returns work? Probably not because we expect factors other than ROI to dominate in the 2020 EB5 market.
Contact us for a conversation on what we can do for you in this brave new EB5 world by emailing us at webmaster@ilw.com, calling us at 212-545-0818 or online.

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