The Wall Street Journal: Source of Cheap Real Estate Financing is Getting More Expensive

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By Will Parker

A retreat by Chinese investors is raising the cost of a once reliably cheap source of financing for big U.S. real-estate projects.

The U.S. government investment program known as EB-5 offers property developers low-cost capital from wealthy foreigners. These investors agree to invest at least $500,000 in real-estate projects in exchange for U.S. residency.

...Even at these higher rates, EB-5 loans can come cheaper than other readily available forms of similar debt that can charge up to 20% interest.

In response, some companies are getting more creative. Greystone, a real estate company that raises money from foreign investors through EB-5, is trying to attract more investors from Brazil. The firm said it was looking into ways to let the investors borrow half the $500,000 investment and pay it back once they are settled in the U.S

Some recent medical school graduates in Brazil may not have enough cash on hand to make the real estate investment, but they want to pursue medical careers in the U.S.,  said Allison Berman, head of Greystone’s EB-5 operation.

“They obviously have great earning potential,” she said.

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