For 18 months straight South Florida home prices have been rising. One reason is cash. For every 10 homes sold in July in our region, seven were bought with cash: no mortgage, no credit check.
Moreover, 90 percent of the cash buyers of Miami condos are foreign, which often means less financial oversight is involved in the purchase.
With little in the way of a paper trail for transactions involving significant sums, some experts worry that the money involved isn’t clean, according to an article by the South Florida Business Journal’s Brian Bandell.
Prosecutors have been busy.
“Federal authorities filed court actions in Miami-Dade to seize 77 properties from alleged criminals so far this year,” says Bandell. “That’s up from 59 all of last year.”
A common scenario: an LLC (or limited liability company) is formed by individuals seeking anonymity; and the LLC purchases South Florida property with money provided via wire transfer or a cashier’s check from a foreign bank. Foreign banks tend to require less information about the origins of substantial deposits, as would U.S. banks, says Bandell.
According to the allegations in the federal seizure cases, some of the foreign money is coming from the drug trade.
It all sounds too familiar to Billy Corben, founder and producer at Rakontur Films, which created the documentary Cocaine Cowboys about the significant impact of the drug trade on South Florida’s economy in the 1970s and 1980s.
“We’ve always subsisted in this town with the next hustle,” says Corben. “We don’t want to know where the money’s coming. The money is propping up this economy so it does no one any good to ask tough questions.”