Raheel Sheikh, Found and CEO of Acquisitions Entrepreneurs.
The E-2 treaty investor visa is a popular option for international entrepreneurs looking to create a life and business in the U.S. While restaurant chains, convenience stores and petrol stations have traditionally dominated this industry, I’ve noticed some investors are increasingly venturing into the automobile rental market.
Car rentals can provide asset-backed security, demand resilience and scalable profitability. Drawing on years of experience guiding companies through their U.S. migrations, I want to shed light on why the automobile rental model has emerged as a particularly feasible investment option within the E-2 framework—as well as the risks entrepreneurs need to prepare for if they’re planning to pursue this option.
Understanding The E-2 Visa
I wrote previously about the E-2 visa and how it allows treaty country nationals to live and work in the U.S. if they make a substantial investment in a genuine operating business. What can make this visa appealing is its flexibility. At the time of this writing, there is no minimum investment required, as long as the capital is “substantial” in relation to the nature of the firm and the enterprise is active, nonmarginal and economically productive.
Through my work helping entrepreneurs pursue the E-2 visa, I’ve found one of the most widespread misconceptions is that this visa is only for large-scale organizations. In actuality, U.S. Citizenship and Immigration Services (USCIS) looks at proportionality, risk and the possibility for job development rather than exact numbers, in our experience. This opens the door to industries such as automobile rentals, where we’ve found a well-placed investment of $100,000 to $200,000 may be enough to begin a lucrative and legal enterprise.
The Potential Benefits Of Car Rentals
Asset-backed investment: Many first-time investors in the U.S. are concerned about buried expenses. An automobile rental company has an advantage in that automobiles are physical, depreciating assets with resale value. In contrast to companies that only offer services, the fleet itself can help insulate investors from risk and offer options for liquidation in the event of unanticipated events.
Multi-stream revenue: Over the past few years helping clients select U.S. businesses, we’ve discovered that the car rental sector is one of the few models that naturally supports multiple income streams, such as daily rentals, monthly leasing for rideshare drivers, long-term contracts with corporate clients and airport partnerships. Investors can also diversify their offerings by specializing in luxury rentals.
Potential for consistent demand: While transportation patterns shift, the demand for flexible, short-term mobility remains relatively constant, and the U.S. car rental market is expected to exceed $56 billion by 2030. Urban populations, gig workers and visitors help drive consistent demand.
Quick-to-market and scalable: In my experience, a vehicle rental system has the potential to be put up in less than 90 days. Investors can start small and grow as demand dictates.
For instance, we worked with a logistics entrepreneur in early 2024 who wanted to build an asset-backed business that would provide a U.S. income stream and qualify him and his family for E-2 residency. He started with a capital investment of $350,000, two employees and nine vehicles. We helped him form a U.S. LLC, craft an investor-friendly business plan, secure commercial insurance, implement fleet management technology and market to rideshare drivers. The company reached 90% fleet utilization within the first six months and a net profit of 12% by month 11. Their visa was approved, and they are now planning to increase the fleet and diversify their offerings. This journey demonstrates what is possible when investment, compliance and strategy are all implemented together.
The Importance Of Strategic Selection
However, as someone who has worked directly with immigrant businesses, I’ve seen firsthand that difficulties can still arise with the car rental model. In my experience, these challenges are not because the automobile rental concept is not viable, but rather because of how it is implemented. Market selection is an area new investors in the U.S. often find difficult. Not all cities provide the same rate of return.
It is critical to approach location selection strategically. The success of a car rental business is determined by its location and strategy. For instance, we’ve found that demand for luxury SUVs tends to be higher in places like Virginia and Washington, D.C., but it flips dramatically in tourist-centric cities like New York City. I’ve also seen that in some areas, tourists and short-term visitors tend to seek out muscle cars or supercars to enhance their holiday experience.
When exploring potential locations, entrepreneurs should consider local tourist trends, customer profiles and vehicle preference data, as matching inventory to local demand can increase profitability and brand positioning. Once you decide on an area, it can also be helpful to look for opportunities to increase your visibility. For example, the entrepreneur I mentioned earlier joined a local chamber of commerce, which helped increase his community presence.
Risks To Consider
It’s also important to note that insurance complications in the car rental sector, particularly for high-end vehicles, can cause claim delays and financial losses for business owners. Inaccurate or challenged insurance coverage might jeopardize cash and business continuity.
Marketing efforts in luxury car rental businesses can also become risky since poorly developed or implemented campaigns can result in the underutilization of fleet assets, which can lead to vehicles degrading in value, as well as maintenance, storage and financing expenses. This can reduce profitability and weaken brand positioning in a competitive business.
Additionally, keep in mind that U.S. immigration policy can change, so ensure you’re staying up to date and following the most recent visa requirements.
Conclusion
As a consultant, I see the rental car industry as a strategic investment vehicle rather than just a temporary solution. However, there is no assurance or guarantee that such an endeavor will succeed. It necessitates careful planning, expert advice, a regional approach and constant adjustment to market conditions. When executed well, it can offer more than just a visa; it could help secure a family’s future, bring about financial independence and put the investor in a position to take advantage of numerous chances across the American economy.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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