Ep.17_Manuel Ortiz on the EB-5 Program, Projections, and Project Due Diligence

During this episode Manuel Ortiz , VP of Global Business Development at FirstPathway Partners, shares his personal experience and outlook on the EB-5 program, while touching on the benefits of concurrent filing for adjustment of status pertaining to foreign national who are already in the United States on a non-resident visa. Manuel also highlights how best to conduct EB-5 project due diligence. If you would like more information or would like to speak with Manuel directly, he can be reached at mortiz@firstpathway.com.

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On today's episode of investing in the American Dream podcast, we have featured guest Manuel Ortiz joining us. Manuel is the newly appointed VP of Global Business Development at first pathway partners, whose experience and understanding of the EB five program are a great benefit to the growing needs of international EB five investors. Manuel is going to be sharing his personal experience and outlook on the EB five program, while also touching on the benefits of concurrent filing for Adjustment of Status pertaining to those foreign nationals who are already in the United States on a non resident visa. Let's get into it. Hi, man. Well, thank you for joining both Peter and I today I know you plan to share with our listeners, your personal experience, maybe five, the changes and outlook of the program, and also sharing your advice on how to determine the success of an EB five project. But let's start maybe with your personal experience and background. Can you maybe expand on your experience? How long have you been in the EB five industry? And what interested you the most is there, maybe a personal sentiment, thank you very much. Just really enjoy being here. And thank you very much. I guess the thing that really interested me about EB five was just a personal tie is that I have an immigrant story as well, I am. I am an immigrant I moved to the US back in 1981, I was three years old. And on my dad's side of the family, my grandfather and his brother owned a candle making business in Spain, it was one of the largest candle making companies there. And they both wanted to come to the US and they couldn't decide who was going to come. And back in the old days, the only way that you could solve those things was two ways, fighting it out or flipping a coin. Coin. Exactly. Unfortunately, I came from a very loving family and they flipped a coin. And my grandfather won. And when I think back at that story all the time, I just think, wow, he had a 50% chance of making it here. And throughout time you just kind of see the jobs that they created. They went from New York and through Ellis Island went to Philadelphia, in California, and you just think, wow, if you would never have won that flip of the coin, I might not even be here myself. And so what I really like about EB five is that you have more than just a 50% chance of coming here. Right? You have yet the ability to be able to pick an experience, EB five firm that has a great track record, like first pathway partners that has 100% success rate and securing permanent green cards. Those things are important. And so that option wasn't there back then. It's here now and I guess that's you know, the EB five story is marrying an investment, and then also the immigration part of it. And that's true and dear to my heart, especially with the way that my career spanned in finance over the last 20 years. Manuel, how has your experience in Eb five changed from the past to your present role? Yes, a really good question. I think when I look back at the EB five space, and really where my career started, you know, 10 years ago, it was very different that EB five industry was not as global as it is. Now I started off at the associate level, a lot of my duties initially, were just verifying questionnaires, checking for the accuracy of the documents. But as I began to grow in my career, I began to develop relationships all over the world through Latin America, Africa, India, and Vietnam. And I began to grow and I took over our EB five team. And as that started happening, the EB five industry started turning a little bit more global. And a lot of the efforts that I started, led our team to win a national award for business development. And I think that my understanding of the administrative part of things, working with our compliance team, being on the ground floor, and developing business strategies is an experience that that not everybody has. So with that in mind, what are some of your initial thoughts on how FPP operates within the EB five industry? Well, Peter, you know, one of the things that I really enjoyed is that we're laser focused on EB five. If you look at our history, we were the 21st regional set During the country, we have an outstanding track record. We've been leaders in the industry and don't get distracted by doing a bunch of different things. I learned from my years in private equity that sometimes when you try to be too creative things can backfire. And, you know, business is hard enough as it is on one thing. Now, if you're trying to hit on 15 different strategies, now your execution risk begins to go up. Right. And so we like to be conservative. And I like that. And quite frankly, our investors like that, too. You know, and since you are more involved now with developing strategy, what are some of the goals you're hoping to achieve? In your new role? Well, one of the lessons that I learned early on in my career is learning the importance that strong leadership really comes from the team, being able to put people in positions to succeed, and provide them with the resources necessary to achieve their goals. You know, the other thing that's really important is just assessing what market demand is, it really sounds cliche, but the team's main goal is to help investors achieve the American dream. Without that none of us are here. Yeah, and EB five is much more than just an investment. It's a true family decision. Yeah, it's a very intimate, it's very special. One of the things that I've always been big on is knowing that EB five is more than just an investment. Right? It's just such an intimate topic that, you know, families save their money throughout the year, sometimes through generations. And not to mention just leaving the your country of origin just coming to a brand new place with just a different way of doing business, different way of going to school. And one of the things that really sets our team apart are just our cultural competencies. Some of our team members are EB five investors themselves, some of us are immigrants. And all of that ties into helping investors achieve the American dream. And, you know, for our goals, we have lofty goals this year. But I strongly believe that they're attainable. And the main thing is just ensuring that investors achieve the American dream. And I think that by having everybody rowing in the same direction, we're going to be able to ensure that we attain our goals, which is a testament to our track record. Exactly. So with briefly touching on some of those changes through EB five history. What are your thoughts on the most recent changes to the program, specifically, through Ria, the reform Integrity Act? Well, the first thing is that change was needed in our industry. It's a program that's been around since the 1990s. And it hadn't really evolved. And so change was something that was very needed, and I USA was at the forefront of the recent changes. For our listeners who aren't aware. USAA is the National Trade Organization for EB five. And its members include 95% of the regional centers in the country. So almost everybody. And the mandate for AI USA, is that the industry has heard in one voice. And this was critically important as these discussions were happening because there was a period in time where we didn't know whether there was going to be an EB five program. And it was really important for the industry to come together. And really under the leadership of our chairman and founder Bob Kraft, who is the president of USA and is now serving his sixth consecutive term. I strongly believe that the industry is pleased where we are in the program now. But there's still a lot of work to be done. Yes, you're so right. Bob has as truly, truly been an assets that EB five industry and has even been instrumental to the long term reauthorization, which is just one of the positive changes of EB five. Yes, I mean, think of some of the cool things that have happened. Right back since the 1990s. It had always been the case that EB five had to be reauthorized every two years. Well, now with these changes, it's every five years. If you take a look at how long a project takes, is usually five to seven years. That means that in the middle of almost every project, within two years, EB five had to be reauthorized. So that created so much anxiety and so much uncertainty for not to mention just the EB five capital firms like us, but just for investors, the level of anxiety uncertainty was something that we don't have anymore. I think that's a really good thing. You also have set asides. You also have concurrent filing. And so those things are really important and really good for the program. And you know what I call now EB five 2.0 You know, you just mentioned concurrent filing. And I know that's become such a popular topic right now. But can you explain what is concurrent filing? What are the benefits? Why is it significant for investors. So now what you're able to do is have an adjustment of status that previously was not allowed. So you're able to do an adjustment of status now. And basically just that means that foreign nationals who are in the US on non resident visas, and whose priority date is current, that they're eligible to file the Form I 526, and concurrently apply for Adjustment of Status. And so basically, what that means is that it takes away the restrictions that come with an h1 b, e to f1 visas, which allows foreign nationals to freely live work and study in the US. So just to step back for a sec, you also just mentioned rural and TA projects in regard to set aside visas. What does this mean, and what are some of the advantages to rural NTA projects? Well, I think it's important to have some historical context here. And previously, the government would set aside a minimum of 3000, EB five visas for investors in TAs that included both rural and areas of high unemployment. That's the way it was set up previously, the power of RIA is that it allows for the US government to set aside 20% of the total number of available visas for qualified immigrants who invest in rural areas, and another 10%, for investors that invest in high unemployment areas. And there's also a 2% set aside for infrastructure. So really, what the 20% set aside is, it helps address some of the visa capacity issues, which is a really good thing for the industry. So what you're saying is that roughly over 30% of all EB five visas are issued by the US government for rural projects, high unemployment area projects and infrastructure projects. That's exactly right. And another thing that's interesting is that whatever visas are not using the current year, carry over to the following year. Now, that's really exciting. And it's great. But I feel like these visas are going to go very quickly, for the simple fact that people will want to get in as quickly as possible, because there's a sense that they are going to go really quickly. Remember, there are two things to keep in mind here. What is visa availability, and two is visa processing. And so the set asides are designed to help address the visa availability. So we've got that covered. But and so that's why it's really important for investors to jump in now as quickly as possible. But the other part of this process is that we still have a little bit of a processing issue. And so if you go to the USCIS website, you'll see a rather lengthy processing time for i 526 is it's something like 58 and a half months, but the silver lining again, where the industry coming together in one voice and then having RIA now, the silver lining here is that USCIS has indicated that they're striving to process i 526, is within a six month period. And I think really for us, our our source of truth and FTP, whenever we talk to investors is always referred to the USCIS website, I think it's really important because in Eb five, you just have a lot of misinformation that's out there. But it's always important just to point back to the facts. Yeah, exactly. It's the best resource for them. You know, kind of looking ahead and moving ahead. When we talk about the future of the EB five program. What do you attribute the current rise in popularity and demand of the EB five program to? Well, we were recently in a conference over in Miami, and it was really great to see the momentum that EB five is having here at the beginning of the year. Yeah, I think you know, historically, and you've seen this yourself, as well as that the beginning of the year, starts off a little slowly. People are coming out of the holidays, you have Lunar New Year, and it just takes a little bit of time to get going. But the interesting thing is that this year, has started to move a little bit quicker. The momentum has started earlier, and you're starting to see interest from some familiar faces, attorneys that we've worked with before, but also new attorneys that have clients that are coming to them asking about EB five where they said, You know, I've never worked in 85. I've been in business for 10 or 15 years. And this is the first time that this is coming up. And then now you're also starting to see broker dealers that traditionally have not been involved in Eb five starting to jump bit as well. And, you know, I think part of the reason that you're seeing that is that, you know, during the pandemic was starting, you start to hear this term about pent up demand and pent up demand. And I think that's true for EB five also. Yeah, I agree, there was definitely a lot of pent up demand because of that. And, you know, there's also, there was so much uncertainty for the program for the last couple of years. And with Ria, you know, the environment provided a lot more clarity and stability and structure and structure and certainty, certainly more than anything that we have seen in the past. Yeah. And obviously, you know, there's a really good book that that I love that's called Who Moved My Cheese that deals with change. And it's, it's an old book, that writing that they have you read that whenever you're kind of going through some form of change. And I think the EB five industry is going through some change right now. But the industry will learn quick, and EB five will be better for it. And also, there are so many other great things. We talked about concurrent filing, and that's really good. But I think just as good or better are some of the compliance things and integrity things that are going into place as well, where, you know, we're basically just providing safeguards for investors to make sure that EB five funds are used for their intended purpose. And that's a good thing. And it's just making the program more attractive globally. Exactly. Yeah. So going off of that. You mentioned previously a conference in Miami, and with your extensive experience in the EB five industry, do you anticipate EB five becoming more popular with investors specifically in Latin America? Yeah, I mean, I think EB five, now, it is certainly a global industry, we're in the service business, we serve as our investors. And I truly believe that EB five is here to stay and to grow. And with that being said, I think that most will say that even with the great things that have happened in a post rate environment, we still have room to improve. And there are a lot of things have been put in place to protect investors. And I think that's a great thing. However, it usually takes a little bit of time to feel the whole effect of the most recent changes. And the reason that I was just focusing on compliance and integrity measures, is that those are things that build investor confidence. And I think as investor confidence grows, and processing times get better, demand will continue to increase. So with that being said, How are you seeing these macro economic landscape shifts in how does that shift effect? EB five projects? I think, you know, that's a great question. It's a very general question, and really depends on on who you talk to you. My personal opinion, though, is that you're gonna start to see more rural projects than you have in the past. And obviously, like I said, you start hearing TDA, you start hearing rural, I think it's important for investors to conduct their due diligence, to see what that really means. But it's also really important to know that, while it's great to have a rural project, it's also very important to understand the fundamentals of the project is is there a really strong exit strategy? Right, because it's one thing to have a investment that is very sound on the integration side, but it's not, it might not be a good investment idea. So I think from a macroeconomic landscape, I think the project landscape is going to change slightly. But I think that the fundamentals of job creation and sound investment are still going to be there. And that's why due diligence is so important, you know, and kind of in alignment with that, and you know, EB five and the growing demand, what are some of the best ways, and then how can we continue to educate investors about the program? I think when we talk about, we have to talk about the EB five industry in general. And, you know, all of us have our part to be champions of truth, champions of accurate information. And I think a really good example of that, you know, going back to Iowa, USA, where the industry just comes together in one voice, I think the educational material that comes out of there, the USCIS website, and we as EB five capital firms involved in this business, also being involved in just distributing just accurate information. And the right information together as one voice as well, is really important. I think that's, that's where we can really make the difference. Yep. I agree. You know, utilizing all the platforms and resources to you use that to put the accurate information out there, you know, yeah. And you're able to see how powerful that can be. When we look at what happened with Ria, we got authorization for five years, which is a big win for us all. And if you look at prior to that, to the early days of dbx five, back in 2008 2009, demand was really high, but because there was so much growth, and things were moving along so quickly, you had a lot of people think, hey, I can get into this EB five business, I can do EB five, right? Yeah, a lot of experts, experts that wants to come in. But you start to think that back then there were also very low barriers to entry. And as a result, some very unfortunate things happened. There was a lot of myths and misinformation. And I think, right now is the perfect time and EB five, two point O, post Ria, environment, whatever you want to call it, where the industry can come together as one to protect the EB five industry, but also ensure that investors are protected. And I really happy to see that just in this short period of time, you're starting to see the industry work together and come together to protect EB five, which in turn protects our investors. And I think that's something that Bob always speaks on is the integrity of the program. That's right. So man, well, with your experience in Eb five and subsequent EB five projects. What are your thoughts on tallis and for those of you who are unfamiliar with Tallis is our new ultra luxury, EB five investment opportunity located in the Coachella Valley of looking into California, I really liked the project. There's just so much history between the Coachella Valley and its connection to Southern California. A lot of people don't know this, but it's a two hour drive from 26 million people, if you take into account the people that live in Los Angeles County, Orange County, and sun and San Diego County. And if you look at historically, I mean, that's that's a lot of people. And if you think of the dynamics of just what the Coachella Valley historically has been, you know, it's been known for the place where people just kind of want to get away, but mostly just for golf, there's 140 golf courses in the area. But I do think that there's a lot of context that needs to be put into action here and thinking about with what's happened in the last three years, the pandemic and just has put a higher level of consciousness and people for wellness and health, and the Coachella Valley is renowned for its wellness, they have a lot of spas, there's agriculture, when you go to restaurants, there's a lot of farm to table. And that all of that just comes together with with the vibe that you have in this area and where this project is actually located. People are super active there. They like to hike, they like to be outdoors. And they like to play golf. Obviously, there's a lot of golf courses there. But there is just a really just a different level of people just wanting to connect with nature now. And so I feel that there's just a very different there's a shifting paradigm here. And this project is going to be very good for the area. Yeah. And going off of that. I think that one of the really cool things that you see in this area is that you you now have different generations of families that have made homes here. And you're also starting to see the numbers of permanent residence increases. Well. Yeah, and I think too, with a lot that's going on in the Coachella Valley, these are definitely things that draw people out to the area now, instead of it just being about golf courses, you know, there's people are seeking new experiences, they're traveling more again, there's other attractions, this area's booming, even amongst celebrities, there's just a lot of gravitation to the Coachella Valley, whether it's for the music or art festivals. So I just think that this is a much needed amenity for that area. And the stats back that up to I mean, I think that if you look at, you know what happened in 2022, if they basically shattered the records for tourism in the Coachella Valley, which is really exciting. People are traveling in large numbers. But you know, one of the things to keep in mind and talking about stats and facts and figures is also that, you know, if you look at the area back in 2003, there were 14,000 hotel rooms in the Coachella Valley. Okay. And if you look at recent numbers, there were still only 14,000 hotel rooms in the Coachella Valley. And so that number hasn't really changed much. But the people that are visiting is changing and that's increasing. So there is demand for this type of this this type of product there. And, you know, I think also if you just take into account where people are actually staying now, they're renting houses they're staying at had Airbnb s or staying in hotels that were built in 2003 or even before that. And so I think that this project really lends itself to providing an avenue for somebody to have a ultra luxury experience. Not to mention, not to mention that it's the montage in the country and the Pendry hotels are very highly regarded. They're very nice. And it's the first time that you have a resort where they're both going to be on this project. Ya know, you make you make a great point. I mean, historically, Pendry montage had never existed in the same location. And Tallis is the first project where they will be together. Exactly. And I think going back to your earlier point, Peter, as well of having, you know, different generations of families traveling together, and those things, you know, they get to enjoy these two different hotels, having two different experiences, but most importantly, being together. And I think, you know, when you look at the differences between the hotels, you know, the pantry is slightly a bit more modern. They have pickleball courts, tennis courts, the Montage has your luxury spa, multiple outdoor pools in the golf experience, but again, different generations of families traveling together, and having different experiences exactly. I know, we talked a lot about tallis and you know, the location, a lot of the green amenities. But in terms of an EB five investment, what really makes Tallis stand out? What are some of the highlights that really hit the nail on the head, in terms of an investment project for EB five investors? Well, I think it's kind of going back to what I had mentioned before is that we're laser focused on EB five. And so because of that, we were able to get a jump on this project, right when the program opened up again. And so this project is moving. It's under construction. And most of the jobs have already been created. And we expect all jobs to be created here in the near future. And you'll The other thing is, you know, I mentioned it's important to partner with people with very important track records. Well are the developer here is the Robert Greene company, which has been involved in successful projects like the four seasons, montage, Pendry, among others, and I want to highlight success, successful part of that, because again, going back to track record, that's really important. And with our track record, and bringing in our EB five expertise, I feel that investors are in a very, very sound, conservative position, and the fact that it sits in a single census tract, T EA that is also eligible for high unemployment set aside thesis Exactly. Before we wrap up today's episode, I would like to ask, what advice do you have for any potential investors out there thinking about investing in the EB five program, or investing in our new ultra luxury, EB five investment opportunity, Tallis? Well, the first thing that I like to say is that we'd obviously love to have you invest with us. But what I would say is that whatever you do, make sure to conduct a very thorough due diligence and just look at track records. Also that as a valid project support to study and understand the fundamentals. Oftentimes we hear catchphrases, like rural TA, but But what is all that stuff actually mean? You know, is it possible to have a project that's fundamentally sound on the immigration side, but not a fundamental investment? thesis? And the answer is, yes, you can have something that's great on the immigration side, but just not a good investment. And so those sorts of things are important. And as I've talked to investors before, you know, sometimes they've come to the US, they studied here, and they want to invest in a project because of its specific location, because that's where they study. But that doesn't mean that it's fundamentally sound on the immigration side, or the investment side, it really has to be fundamentally sound on both. Yep, I agree. And I know that we've had, you know, others kind of speak on that and doing the due diligence and researching, you know, the regional center, researching the project, making sure that their journey is going to be successful, you know, from an investment standpoint, and an immigration standpoint as well. So I know we're wrapping it up. And you know, I just want to say thank you again for sharing your insight and expertise with us. And if any of our listeners have questions and want to contact you directly, we will be sure to include your contact information in the episode description. So then well, and Peter, thank you both for joining us. I do so thank you, everybody. Thank you for listening. If you would like to know more about first pathway partners, please contact them directly online at www dot first pathway.com