In 1994, Alket Kulla was greeted in Peterborough, Ontario, by his parents and an astonishingly cold winter. Only 14 at the time, Kulla already had a sense of the opportunities offered by the free society that had welcomed his parents four years earlier. Having been deemed enemies of the state by Albania’s brutal communist dictatorship, Kulla’s family was forced to scrape together a bleak existence in one of the most remote and forbidding corners of the country. But having outlasted a totalitarian nightmare that Kulla likens to present-day North Korea, his mother and father were free to finally give their children the stability, security and hope they had learned to live without for most of their lives.
Kulla dove headfirst into Canadian life – the language, the culture, the cold – and quickly felt at home. “That was a year of adjustment,” he says, “but things got a lot easier and better after that.”
Few would have guessed just how much better things would get for Kulla, who currently oversees a growing portfolio that includes one of the most innovative redevelopment projects Peterborough has ever seen. But getting there – like his family’s journey to this country – would require sacrifice and no shortage of risk.
In 2002, Kulla was a promising import specialist at Anixter’s Mississauga office. After life in a country where citizens had little control over their futures, let alone their finances, Kulla was looking for a clear path to financial independence. Having witnessed his construction worker father’s projects come together in Albania, and recently having read Richard Kiyosaki’s classic Rich Dad, Poor Dad, he began to fall under real estate’s seductive spell. “The more I learned about it, the more I loved it,” he says.
Kulla ran into difficulty finding a property in Mississauga – even then, the prices were high and the competition stiff. His adopted home of Peterborough, where prices were a third of what they were in Mississauga, provided the opportunity Kulla was looking for. With the help of his sister, who co-signed his first loan, Kulla was able to purchase a two-unit raised bungalow for $130,000.
The tenants he assumed helped to pay both the mortgage on the property and his rent in Mississauga, and that first taste of success was all Kulla needed. He was hooked. “It’s almost like a drug,” he says. “It really is.” After acquiring two more Peterborough properties, Kulla was feeling fully electrified. It was time to make a choice.
“I stepped back and said, ‘Do I want to work in the corporate world and continue investing little by little, or do I just want to give that up and focus on real estate?’” he recalls. “The more people I talked to and the more I looked at the Peterborough market, I could see a demand. I could see a gap, and I could see the potential that was untapped in Peterborough compared to other markets.”
The end of 2004 saw Kulla returning to Peterborough and undertaking a new career as a Re/Max agent. The same year, he dove into the first of two risky ventures that would not only strengthen his portfolio, but also announce to the region that an investor with vision had arrived.
No risk, no reward
Kulla’s fourth purchase was a mixed-use property in Campbellford, a small town of under 4,000 east of Peterborough. The building contained eight apartments and two commercial storefronts – an ambitious scaling up for a 24-year-old with only three singlefamily homes under his belt.
Re/Max Eastern – advised him that to beat out the competition for the property, he would have to do some creative thinking. Kulla went home that night and wrote an impassioned letter to the building’s owner, laying out his vision for the property: significant renovations that would attract top-shelf commercial and residential tenants while adding life to that section of town. The owner accepted Kulla’s offer, but only after Kulla agreed to a vendor take-back mortgage, which he held until a few years ago.
“I was paying a really high interest rate, but at the end of the day, the numbers worked, and that’s all I cared about,” Kulla says. The building has since quadrupled in value.
Now that ‘mixed use’ has become a buzzword in communities pushing a densification agenda, Kulla advises investors who are considering similar properties to temper their thirst for profit with patience and sound advice.
“Before you get carried away, speak with a local specialist who is involved in transactions such as that,” he says. “Be cautious; talk to people who understand the buildings, the codes, the bylaws, and who have invested in similar properties.”
Kulla’s overwhelmingly positive experience in Campbellford whetted his appetite for bigger projects. While he continued to bolster his portfolio with smaller properties that were solid performers – a duplex he picked up shortly afterward is netting him $1,800 a month in cash flow – he kept his eyes open for a property with long-term upside.
He found it in Peterborough’s old TD Bank building, which, by 2006, had been sold off and turned into an unimaginative combination of a Coffee Time, an offbrand dollar store and two floors of drab apartments. Kulla’s vision for the building – luxury lofts in the second and third storeys and main-floor commercial tenants worthy of such a high-traffic area – was a stark contrast to what existed.
“It was probably one of the riskiest investments that I had made at that time,” Kulla admits, “but I knew that going into it. I could see the potential.”
Kulla’s plan was to give the city something it had never seen, but getting financing proved to be a challenge. The residential tenants in the upper floors were less than ideal and paying rock-bottom rents. Still, Kulla persisted in presenting his vision, not just for the property, but also for the city that had opened its arms to his family.
“In any city, if the downtown is vibrant, the whole city is doing well,” he says. “I wanted to attract a calibre of people who bring life, who spend money and who are part of our economy every day.”
Kulla was able to purchase the building in 2006, but he wouldn’t start remodelling it until 2015. During that time, which included a four-year commercial vacancy and two years of empty apartments being broken into by the homeless, Kulla had to rely on the rest of his portfolio to pick up the slack.
“I knew I had a challenge ahead of me,” he says, “but the way I look at it, if it’s too easy, everybody’s going to do it.”
Nothing was easy about the TD building. It took two years of gruelling work, but in April 2017, Kulla finally received the building’s occupancy permit. He now rents the space to a restaurant, a clothing boutique and eight A-plus tenants.
For Kulla, who looks at his projects from a five- or 10-year perspective, the results of his most ambitious project were hardly surprising. By using data from similar markets to anticipate future rental revenues and appreciation in Peterborough, Kulla has been able to confidently execute major purchases and then shape them to fit what the market desires.
“You have to have the courage,” he says. “You have to be willing to commit and be dedicated. You have to find unique ways from everybody else.”
For those investors wondering if it’s too late to replicate some of Kulla’s success in Peterborough, he believes the market still has plenty of room to run.
“I think we’re just at the bottom of the peak starting,” he says. “I am very confident in saying that we’re probably one of the best places to invest, dollar per dollar.”
Money goes farther in Peterborough than it does in larger, more glamorous cities. For investors with vision and patience – investors like Alket Kulla – there’s no limit to how far it will go.