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“No lending rules?” Lane repeated, his gravel voice incredulous.
Austin nodded as he exited the expressway just west of the Florida Turnpike.
“Right,” he said. “Banks that make mortgages are required by law to confirm that the buyers are legit, that they’re not, for example, laundering drug money. They make buyers prove where their funds come from. But private mortgage is like me reaching in my pocket and lending you the money personally. I come up with the terms—it’s up to me what the interest rate will be, how much of a down payment I want, and if I care where your money comes from.”
Lane looked at him. “You’re laundering money?”
Austin shook his head as he glanced at him.
“Hell no. I am making money by bringing investors together in a fund that delivers a high return on investment, and taking my percentage from that. Each fund—in this case, the Morgan Partners Florida Capital Fund III—provides the developer with the money to build and market his project. Which includes handling the private mortgages.”
Lane nodded.
“Now,” Austin went on, “the developer is going to do his due diligence. But a lot of the buyers, to keep their names out of public records, have set up a corporation to be the buyer of record. These corporations, the sole purpose of which is owning the property, often are owned by another corporation the buyer has set up under the buyer’s control. But the thing is, you can follow that paper trail only so far, especially because it can lead to foreign countries, and that gets complicated and expensive. So, the developer, after vetting the paper trail to his satisfaction, simply decides the terms of sale, including if there’s a premium involved.”
“That’s never a problem?”
“Occasionally,” he said, draining his beer. “But buyers really want the property. And with demand exceeding supply, those who balk are replaced by others who pay up. More and more, there’s not even a note—buyers are paying cash in full.”
“This investors’ fund of yours sounds solid.”
&
nbsp; “Rock solid,” Austin said, glanced at Lane, and went on. “And with that demand high, there’s no end in sight. Take the Chinese. They are awash in cash they want to invest. Some of it is state-sponsored, some of it quiet money. They love America—and they really must: we owe them one-point-three trillion, which is mind-boggling money—and they’ve been on a buying spree. They’re snapping up our existing landmark hotels—from two billion to buy the Waldorf Astoria in New York City to almost that much for California’s Hotel del Coronado—and they’re building these other high-end properties. And then Chinese individuals, as well as buyers from other countries—from Central and South America to Europe—are buying into them. This Miami condo you just saw? There’re foreigners who’ve bought three, four condos at once.”
“And before it’s finished?”
“Oh, yeah. There’s a lot of hidden wealth. With the Chinese, you’re talking about a country with a billion more people than America. They’re already showing huge interest in the House of Ming Condos, and we haven’t even broken ground. So far, according to the developer handling its private banking, about a third of the pre-sold units were bought by Chinese parents planning for their kids to use.” He paused, looked at Lane, and added, “None of which would been happening if you hadn’t used your veto that got us that parcel.”
“Councilmanic prerogative,” Lane said. “If it’s good for Philly, and especially my district, I’m all for it.”
“And it is great for Philly,” Austin said, nodding. “Every year, the University of Pennsylvania alone enrolls thousands of foreign students. Medical students, engineers—you name it, they want it. There’re three hundred thousand Chinese attending U.S. universities. That’s twice the number of five years ago. And, after graduating, you can bet many want to stay, especially if they can snag a EB-5. More than three-quarters of last year’s—almost ten thousand EB-5s—went to mainland Chinese.”
Lane nodded. He knew about the reasonably new visa program that was a fast track to U.S. citizenship. All a foreign national had to do was invest at least a million dollars in a U.S. business that created and maintained at least ten jobs for current American citizens, plus jobs for himself and his family members. In exchange, the U.S. Citizenship and Immigration Service issued green cards to the foreign national, to the spouse, and to their children under the age of twenty-one, followed by full citizenship.
Austin went on. “This is the next generation that will be their permanent bridge between the U.S. and China. Which explains why they’re buying, why they’re investing in solid assets, here.”
As the SUV rumbled over a railroad track crossing, Lane noticed that the streets and roadsides now were coated in a white dust. And, after a moment, he saw why: next to a concrete manufacturing plant was a limestone quarry that looked like an enormous—at least twenty acres—white-rimmed pond filled with sparkling greenish blue water. Beyond it, there looked to be nothing but a swamp-like wilderness.
We’re out in the middle of nowhere, he thought. Or at least on the edge of it.
Just up the dusty road from the quarry Lane saw, far out in the middle of an open field, chain-link fence and concertina razor wire. It encircled what he thought, considering its institutional design of heavy cinder-block walls inset with very small windows, had to be a jail.
“That’s the correctional facility,” Austin said, having noticed where Lane was looking. He chuckled, and added, “No one tries escaping from there.”
“Because of the fences?”
“Because of the alligators, which the fences keep out.”
Lane wondered how much of that was true, as Austin sped though two more turns, passing distribution warehouses for a grocery store chain and an auto parts chain.
Finally, the SUV pulled through a gate and stopped before a two-story building, its sunbaked, corrugated-steel skin a faded blue. The manufacturing plant looked as if it covered at least four acres. Bolted to its front was a sign with bright lettering: FUTURE MODULAR MANUFACTURING, LLC.
Austin turned in his seat, and said, “I’m really glad you took Camilla Rose’s suggestion and made the trip to see this. You’ll get a good idea of how it will work in Philly.”
“The lady is quite convincing,” Lane said, nodding. “I’m happy to have her support. And, no surprise, she’s right again. So far, I’ve been impressed with what you’ve shown me here.”
“You ain’t seen nothing yet,” Austin said as he reached behind the seat into the cooler. “Another beer? Gets pretty hot here, even in January.”
