In India while I was studying for my undergrad in Finance at Delhi University I started a private school at age of 20. I used to tutor high school students and make money to support myself. I decided to rent a place where I could hire other teachers and teach students. With the help of my parents I leased a building with an option to buy it from the Government at a very nominal rent to run my first school.

Government at that time wanted to help business people so they leased that building for lot less then going rates. My first school became profitable in four months. I opened few more schools and they all were making little bit money. My parents and family joined me in managing those schools and we had close to five hundred students and forty people working. We are still running those schools and the real estate worth of those schools is close to few million dollars. Once I sell my share in those properties I have decided to give it to charity.

While I was running schools I had a friend who was an exporter of garments from India and was looking for someone to travel on his behalf to book orders for his export company in Europe. He agreed to pay my ticket to Europe and very little expenses for 15 days which were just enough to buy euro rail ticket as I had to move from city to city. I had to manage to stay at youth hostels, friends, relatives, or real inexpensive motels. After travelling Scandinavia, Germany, Belgium, Holland I ended up in London and stayed with my uncle for three months who found me an odd job with one of his friend which gave me some money to travel more. I got enough orders for export and my friend who had paid my trip to Europe was happy as he got some good contacts and made some money with those orders. I returned to India after six months as I was home sick and did not like Europe too much.
I met my wife Kusum who at that time was living in Canada. In October 1974 after getting married to my wife I decided to move to Canada. My wife Kusum had a teaching good paying job in those times. In Canada with no money in pocket I could not start my own business right away. We both saved $6000 by the end of 1975 and put a down payment of $3000 and bought three bed room house for $26000.00. Banks gave us a line of credit for $5000. In the year 1975 with that money I started a small clothing store in a very bad mall. However I was able to survive as Kusum had a good job and with one study income coming we were able to pay our bills and still save some money. As I had experience in garment export I started importing readymade garments from India, Pakistan and China. I was wholesaling this material to other stores. My company became very profitable in no time and I had close to five hundred thousand dollars of inventory and accounts receivable within two years. Clothing business had a very good cash flow.

Montreal had a big depression in the real estate market around 1978. I bought my first commercial building in 1978 in the poor area of midtown Montreal. The property had two shops on the ground floor and a rooming house on the top two floors and six one bedroom apartments on the back of the building, which were very old and needed renovation before leasing them. The guy who sold me the property was fed up with the rooming house which was not making money but rather losing money, and the apartments in the back were more of a nuisance because they were old and only three out of six were leased. It was winter and apartments which were empty they were not heated and some pipes had busted because of freezing. Few tenants also were not paying rents and landlord was not taking care of few small repairs which were needed. The stores were leased out at a very low rent, although their leases were expiring and the rents could be increased in the near future. The building was not making any money but somebody had to take care of the tenants’ headaches. The landlord who owned the building was trying to do everything himself as he did not trust any one. As he had another retail business to run, he could not take care of the building. This landlord was also of the nature that he had to do everything himself so he was tired and as he could not do everything himself he wanted to sell the building and get out of the building.

This landlord sold me this building for $115,000 with the $25,000 down payment. I did not want to take out more than $25000.00 from my business to buy this building. The bank only gave $65,000 loan as the building did not have any revenue. Now where did I find another $25,000 plus closing costs to buy the building? I asked the landlord to give me a second mortgage for $27000 at 17% and I agreed to pay him back the money with interest after 3 years. If I did not pay him, I will lose my $25,000 which I had given him so he agreed to give me second mortgage and I became owner of the building.

As I had a very good cash flow from my clothing business so after buying the building within a year I renovated and converted rooming house into four studios and leased them for $600 a month each. I also renovated three apartments in the back building which were empty and leased them at $325 each. After 18 months when one of the store lease came for renewal I leased it for $1800.00 a month old rent was $1000.00 a month. After two years building had close to $72000.00 of gross rental with a net rental of close to $56000.00. Bank appraised the building for $55000.00 and lent me $420000.00.

By Ashok of http://becomerichinfiveyears.blogspot.com

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