Teaser 274: India Ventures, Inc. Begins Minus a $400 Million Head Start
We quickly got down to business and I asked about the twenty-four unit complex as far as the average rent. As I expected the average rent was considerable. I announced to both I won't even look at it. I have no interest in it. As for the rest out came books with pictures and descriptions and I inspected closely how the condition of a room or apartment appeared. The better each looked the less the property appealed to me and I expressed my opinion to both. Four looked promising, two apartment complexes and two hotels. I asked if Ram had a map of Amritsar and the area covered by the properties. He pulled out a large map and spread it over his desk. Two of the four were within the city limits of Amritsar, one was east and one southeast. I asked Ram to try to arrange for all of us to see these four properties and I wanted to inspect more than one apartment or room plus the manager's dwelling unit. Ram advised he would have to call and arrange first and I nodded.
“What really is your objective, Al-Barrak, with such a property, if I may ask, because it would help me to help you?”
“Primarily, I'm looking at a hotel, one which needs work, is not well-maintained. The biggest disadvantage for me with an apartment complex concerns the existing tenants and regulations regarding landlords and the living premises they provide. I don't want to run tenants out but renovating and refurbishing typically increases the worth of such an apartment, so it's generally what will happen, I will inevitably run them out because they're already living in what they can afford. I can keep an open mind about it, since I also intend, at some point, to start up other business endeavors, such as renovation or new construction. I have a history of performing this very endeavor successfully in Africa, renovating or building new affordable housing. I could, then, offer existing tenants an employment opportunity in exchange for rent. These are options and I'm only limited to what I can do legally here. What I won't do is become a landlord for the well-off. There are plenty of those types everywhere, but there is always a need for those who can provide affordable and comfortable accommodations for those who are not so well-off. That is what appeals to me, Ram. Perhaps, we can find a hotel which needs renovation and which we can then turn some of the units into apartments while the others remain part of the hotel. I'm sure there are regulations concerning this change, zoning or whatever you call it here in India, but this is what we're paying you for. Now that you know who I am and what I want, what else do you need?”
“Once we're ready to close, we'll need to confirm your financial condition.”
“When we get there, Ram, I'll arrange a phone call to my bank in Switzerland. When we conclude the call, all parties will be convinced my financial condition is quite sound.”
“You have thought this out carefully, haven't you, Al-Barrak?”
“For years, Ram. It's been years in the making, and with Omar as my partner, he makes it even more possible.”
On the way back to the hotel Omar wanted to discuss our partnership, but I told him to wait until we arrived at the hotel to conduct our discussion in private. He walked with me to my room and once the door was closed, I invited him to sit down and get comfortable while I offered him a water bottle and removed one from the mini refrigerator. He thanked me and I handed it to him. “Here's my proposal, Omar. We're looking at, right now, maybe topping off at roughly five million in U.S. dollars depending on which one we choose. Whatever we can also reasonably determine to be the renovation cost, that plus the sale price of the property becomes our cost basis for beginning the partnership. What you have to determine is what you can afford to put against this cost basis to become my partner. Since we haven't discussed it yet, I don't know what you can reasonably raise from selling all your holdings in America, so let's run through an assumption to give you an idea. Assume the property and renovation cost is five million. I pay it up front, you settle all your holdings in America, and from this you can afford to pay into the partnership one million. You now own twenty percent of our partnership and with your ownership you receive the use of one unit as do I. Should you need more than one unit for your entire family, I propose we always split the units for family use fifty-fifty, meaning you get one, I get one, you get two, I get two. Your ownership will always be twenty percent unless you raise additional capital to buy in. Remember, though, other than your initial investment, every time you buy in the worth of the partnership has to be re-evaluated, and I won't consider any more than fifty percent to you. I will be at worst an equal partner, but I will always accept you as an equal partner as long as you can come up with half the investment cost.”
“What if I can't raise the initial capital to buy in? How long will you hold my invitation to be your partner with my initial investment?”
“I'll give you one year from the closing date. I will, however, expect you, as a complete show of good faith, to be here, or have someone from your family here, to help with renovation and management while I'm waiting for your initial investment. This means, Omar, I will give you a short amount of time to start the sale of your holdings in America and return here to help with the work which needs to be done or send someone in your stead. That's what a partner does. A partner is in on everything or out completely. If out, Omar, you will keep what I've paid you and walk away forever.”
“I'll have to think about it.”
“Don't think about it too hard, Omar. Even if you can't raise fifty percent you will still have the personal use of an equal number of the units as I will. Further, I will accept you as my partner for no less than ten percent, but as time goes on, the amount to increase your ownership will go up. I know what I'm doing, Omar, but there's only a small number of people the world over who realize I know what I'm doing. Put your skin in the game with me and show me you trust I know what I'm doing and I'll know I can trust you, too.”
Omar did think about it hard. Fortunately for all concerned his thinking took place, mostly, while on a phone conversation with his wife, Darshana. Perhaps more than Omar, she missed Punjab province and India. It was where she and her family belonged. They had done well in America but she didn't feel like she belonged. At times she felt resented. That's not exactly hospitable, but it didn't surprise me when I heard it. America, to me, had become a spiteful, divided country, united only in one aspect: nationalism, militarism. Since it took such poor care of its volunteer militarists spoke volumes to me and I wondered why the entire country couldn't hear it. You bet they'd hear it once it was no longer voluntary but compulsory. Once Romney's five boys wore their shiny, new Army uniforms, the militarists would be taken care of. Do I smell hypocrisy? No. I smelled the sleazy, snake-like thread of fascists stirring up the poor and confused to fight the endless battles which always result in a profit for these very fascists. That's what I smelled and it was putrid. No one knew my plans. I never shared them with anyone. Like Orson Welles from the past, I would visit but never again live in America.
“I think I can reasonably provide one million in U.S. dollars to our partnership,” is how Omar greeted me in the morning. In quiet tones we next discussed during breakfast the formation of our partnership. The greatest advantage, to protect our individual worth, was to form a corporation based in India and decided to call it India Ventures, Inc. It would require an attorney but we wouldn't need to proceed until we chose a property and could figure the percentages. “So, once we choose the property, close it, then we can determine the ownership percentage, is that how you see it, Al-Barrak?”
“Exactly. You and Darshana, then, can liquidate your holdings in America and we can get started on renovation and changes to the property. We'll engage an attorney, write up the corporation and put it behind us. Agreed?”
“Agreed.” We shook hands quickly as I watched Omar's big smile fill his face.
“Which one do you favor? Have you seen any of them?”
“I'm beginning to see it as you do. I think the two left here in Amritsar are probably not going to remain attractive and will be dismissed.”
“We should tell Ram to get us to the two outside Amritsar first. We want to see those two first.”
Omar pulled out his phone and left that message for Ram, who called back an hour later. He already had arrangements at all four but in no order so he advised he was ready to go to any one when we were. Omar advised we were on our way to his office. In the taxi, I was reminded of a certain driver still in Germany. I left a message for Heinz. “I will need a driver once we have secured a property here in India, which should be a matter of days. Please await my next call.”
- Just Desserts, Segment Thirty-Three “Journey to India” by Gregory R. Schussele, © 2021
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