Friday, May 4, 2012

Who in their right mind would want to risk their money in a Regional Center?

Regional Centers don't even have a clean exit strategy as you are holding illiquid assets that are not easily saleable. Go ahead, ask them about their exit strategy. Compare it with direct investment, where you usually get total autonomy over when to sell your business and more importantly, get to keep the profit if the business appreciates. They may offer you a subpar return on equity, but certainly won't offer you any appreciation in profits. Most of them require you to use their affiliated entities to liquidate your investments.

Every investor needs to ask EB5 Regional center promoters whether the promoters actually tried raising money from Banks and / or through public offerings? The reason EB5 regional center promoters can't usually raise money from banks is because their projects can't withstand the scrutiny of a bank's underwriters, and the reason why promoters can't raise money by offering securities in the projects to US investors is because US investors simply won't invest their money in projects with low return on investment and an inherent inability to liquidate the investment in short order.

The above are reasons why it is smarter and safer to invest money in a direct investment. At the very least, an investor can usually expect to earn at least 15% return on equity each year and easily sell off their business within weeks if needed instead of locking up money in an unviable project for years.

No comments:

Post a Comment