Fifthtry

The Patel Motel Cartel

Was reading this excellent post by Nathan Berry on wealth creation, and came across this:

Did you know that 50% of motels in the United States are owned and operated by people of Indian origin? One of my favorite articles I’ve read in the last year was in the New York Times and was actually written back in 1999, it’s titled, A Patel Motel Cartel?

In the 1950s families from India started to immigrate to the United States. Because it was so expensive they often relied on money from family to help them get settled.

Once in the United States they got jobs, earned more, and paid it forward to others in their family to help them make the same move. The money was never repaid, but always paid forward.

But the real magic came with what they did next. Instead of pursuing normal jobs a family would pull together all the money they could (from their own savings and from extended family) and use it as a down payment on a small motel. The family would then move into it and run it full time. Spending their days and weekends working the front desk, cleaning rooms, and making beds.

Over time as it grew into a meaningful business they would have some free capital to pay forward to another relative who would do the same thing.

They worked hard hosting thousands of guests and carefully stockpiling money. Whenever the stockpile grew large enough it didn’t go into increasing their lifestyle, but instead into the next opportunity, which was nearly always another motel.

By 2003, when the article was written, Indian immigrants owned half of all the motels in the United States. Not only were they continue to earn great revenue from each booking, but the land has appreciated over the decades to become incredibly valuable, making these families rich.

My three favorite things are that they:

Have been following Nathan for now close to a decade, and it is exciting watching and learning from the sidelines.

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