In the Pilot Plan program, in Radio Agricultura (Chile), they interviewed Iván Rodríguez, Vice President of International Business at BAI Capital, to discuss the benefits of investing in the United States, the possibility of obtaining the Green Card and the growing interest of Latin American investors in this market.
Inflation is a phenomenon that directly affects people’s purchasing power, increasing the cost of living and devaluating money. And it currently affects virtually every country in Latin America, so it is becoming more common to look for ways to protect capital from inflation and achieve better returns.
One of them is to invest in the United States, which, due to the strength of the dollar against other types of currencies, facilitates the maintenance of the value of assets despite the economic and political situation of each country. Investing in the USA also allows the investor to apply and obtain a Green Card for him and his family, meeting certain requirements.
On this, he spoke with Iván Rodríguez on the Constanza Schultz of Radio Agriculture in the Pilot Plan program. We invite you to read the full interview below.
Hello Ivan, could you tell us about your journey with BAI Capital?
I work as Vice President of Business for BAI Capital, basically raising funds for the real estate company that develops real estate projects in the United States. Some of the capital we use to develop our projects is private equity.
Are you referring to private investors entering an investment fund with a certain return during building construction?
Correct, they are private investors who enter a private equity fund and contribute some of their capital for this development. An important part of our investors is not just looking for returns, but what they are looking for is to participate in the EB-5 program. The EB-5 program is an immigration program for foreign investors that, through an investment, allows them to apply and obtain the Green Card, for themselves and for their immediate family, immediate family members.
How do you see this market in Latin American countries compared to the United States?
In the case of the USA, particularly in Miami, it is incredible but the pandemic benefited the real estate sector, because many local people, from wealthy states like California, New York, decided to transfer to Florida for different reasons: the properties are cheaper, more spacious, Florida is a state that has no state income tax, then a lot of investors, Americans and also international people transferred to Florida.
This has led to a boom in the last few years in real estate, and prices rose almost 50%. Actually this tough time has been very positive for Florida real estate.
How do you think the market will behave in the face of an imminent recession by 2023?
Yes, indeed the possibility of recession is a real possibility, inflation in the US is also quite high, last month it was at 8.2% and logically that has caused the government to have to raise interest rates, and that is slowing the economy a little. So we do feel that in the real estate sector the dynamics are stopping, it is slowing down, but what we don’t see is crisis.
We think it’s going to slow down, we’re no longer going to see 20%, 25% increases, which was exaggerated, but it’s going to moderate. I think it will moderate by 2, 3%, it will stabilize. But I don’t see prices going to go down considerably at least.
What if we compare it to neighboring countries, with something that may be more similar to the reality of Chileans?
Throughout LA we are seeing inflation, there is no country that is saved. But in Latin American countries we are seeing higher than American inflation. The US was 8% in September, but Latin Americans are doubled, Chile was 13% in September, they are above. This tells us that Latin American currencies, many of them, are going to devalue against the dollar, is the trend. That leads investors to seek refuge in the dollar, a more stable currency for future investment.
Can you tell us about the Archer Place project in Gainesville?
At this particular time, on the project we are offering Archer Place, we are under pre-construction. This project is located in Gainesville, a college town in North Florida, 150 kilometers north of Orlando. It’s a city that’s important and relevant because it’s home to the University of Florida, which is the state’s largest public university, so it’s a very university-focused project, including a student residence.
That to ensure a good rate of sale and lease and flow?
Yes, student residences are a very strong asset, they are countercyclical, because contracts are annual, so even in times of crisis, even if the student does not go, they must pay the rent, so they are very reliable, solid and stable assets in times of crisis.
What are the immigration benefits of investing with BAI Capital?
We raise two types of investors. The pure investor who wants to participate in the investment because they want to protect their dollar money or have a higher return. But we also capture EB-5 inverters, that’s our specialty. Our business focus is the EB-5 inverter. In our current project, Archer Place, investors are going to be shareholders of the development company.
And as shareholders, they are going to have benefits, they are going to be paid an annual interest and in the end, when the project is sold, they are going to also be given a profit distribution. Then there are two sources of profit, a return that is an annual interest paid, and ultimately a profit distribution.
And in addition, the EB-5 investor for participating in this process, will have the possibility of obtaining the Green Card or permanent residence permit for him and for his entire immediate family. It is important to say that the EB-5 program is a federal program, there is a congressional commission that carries it and there is a law that governs it, so the investment is governed by law that is 800 thousand dollars, which is what is requested to be able to apply.
And it doesn’t work for any real estate project, it must be structured under the EB-5 program rules. It must have certain characteristics: that it is affiliated with an agency called a regional center, they have to meet certain details and also it must contribute that amount of money, it must be able to show the origin of the funds, etc. It must be on a single project, it cannot be diversified into multiple projects. At the EB-5 level, it must be a project under established standards.
If we had to give an estimated term, since I invested, what are the return terms of my investment?
The investment is approximately 2-5 years from the beginning. In this project we have already been pre-constructing for 1 year, so our idea, our plan is for investors to be coming out of 2027. That’s the exit, capital recovery, and profit sharing timeframe.
What are these benefits?
To the pure investor, we give an annual interest of 7% on the invested capital. And at the outset of the project, when it is sold in 2027, it will be given a profit distribution. The sum of all investors has % ownership of the project.
And how do you see the profile of Chilean and Latin American investors?
We see a great deal of interest in Chile, both in pure investment and in participating in the EB-5 program. In fact, I started coming to Chile in my role of raising capital last year, I came in November 1 month, then I returned in March, I came for 15 days and I stayed 3 months, until June. Now I returned in October, came in for 19 days, and extended for November. I am staying longer because I see a lot of appetite for investing, we have already raised quite a few Chilean investors in pure investment and EB-5.
So it’s a country that we definitely see a lot of appetite for. And we see that Chile is a country that has a real estate culture, the Chilean already has real estate investment experience, not only investing in buying properties, also investing in real estate funds, participating in the developer’s capital, so he is a high-level investor who knows the market very well in Chile and is now going out to look for projects outside.
What are the requirements to share in the company’s capital?
Everyone can participate if they have the capital. The fundamental requirement of such investments is to be an accredited investor. We issue private shares, to participate in private share issues, the SEC (Securities and Exchange Commission) in the USA asks that the investor be accredited, so it must meet certain equity conditions in order to participate. We help the investor in this process. It is not necessary to be physically in the USA to sign the documents and prove it, so it can be done from the country of origin.