Infrastructure-based regional center projects are those that, to a large extent, rely on partnerships and/or investments in community or state and government agencies.  Primarily, these funds are loaned out to these sorts of agencies and entities, or to recommended projects that have more of a regional or community development focus.  Because of the nature of the investment, these types of regional centers may offer a more secure, yet lower return investment opportunity.

There are a number of other comparisons and differences to consider, in particular in comparison to real estate-based ventures.   For example, these investments are loan-based and have a definite period of repayment.  You will know precisely when the investment will be returned, and it will not rely on market factors.  At that time the partnership may be dissolved by design of the contract, or liquidated according to an outlined exit strategy. Generally speaking, though, these types of investments have a definite and limited period for return, which makes the situation overall more predictable.

Also, because infrastructure-based loans are often worked in conjunction with government agencies, there is local agency or state involvement. While this does not guarantee a risk-free investment, many times it results in an increased level of project oversight, as the agencies and entities involved are also keeping eyes on their interests.  This is not always a given and cannot be taken for granted, but it is one factor that tends to work in favor of infrastructure-type regional center projects.

In addition, the investment is normally tied to the loans that are made, and so they have a defined rate of return that is based off of the terms and interest rates on the loan.  The down side to that, however, is that the rate of return is usually more modest than higher risk investments, such as those that are real-estate based.  So while an infrastructure-based regional center program may offer the benefits of a simpler, clear exit strategy and pre-determined rate of return, they will not yield as high a profit for you as an investor.  Again, it all depends on what your priorities are, or if you want your EB5 investment to work as more of a multi-tasking investment.

All in all, infrastructure-based regional centers can be (but surely not always) “safer” investments.  However, again, much depends on the foresight and planning of the subject project to begin with, and so it is not enough to assume that an infrastructure-based project is a guaranteed thing because of the nature of it or the players involved.  Something else to keep in mind is that without property, there may be no real collateral for an infrastructure-based project, and so in effect there could be even less security.  Always keep in mind that if there was not a level of risk, the investment would not qualify as a visa-eligible investment to begin with.

Tomorrow we will look at Fund-Based Regional Center Projects.