Buy a company, get a visa - but is it worth it?

REVIEW SUMMARY
Entrepreneurs. Gilly and Sam Melley
Company. Naples Maid Service
Key. The land of opportunity can be risky for foreigners.

Gilley Melley had only been in Naples one week before she met a fellow Brit who was headed back to her native country.

To obtain a visa to live in the U.S., the woman had acquired a hair salon in Naples and the manager had run off and started a competing salon of her own. “Little did we know we were going to have the same experience,” says Melley.

Melley says she's since heard of other similar cases as sellers take advantage of foreigners who pay big sums for service businesses in the U.S. in exchange for a residency visa. Shortly after foreigners acquire a business, the previous owner disappears and employees steal clients and start their own competing business. “This happens over and over again,” Melley says.

It's a cautionary “buyer beware” tale as the government seeks to attract more capital from foreigners eager to live in the U.S. Often, law enforcement officials can do nothing to help because no laws have been broken.

Melley and her husband, Sam, bought a house-cleaning business in 2007 for $100,000, the minimum required to obtain an E2 visa. Such a visa allows foreigners to live in the U.S. if they make a substantial investment in a business.

The cleaning business, which they've since renamed Naples Maid Service, had five employees, 65 clients and a rental-storage unit. “I was buying the customer base,” Melley says.

The previous owner agreed not to compete with the Melleys after she sold them the business, but the employees had no such restrictions. One of them started her own cleaning business and siphoned off the clients Melley thought she had acquired. “I lost 57 clients over three months,” says Melley.

An unfortunate car accident within weeks of her arrival in Naples sidelined Melley before she could persuade clients to remain with her. “We paid $100,000 for four broken vacuums,” she says ruefully.

Compounding her problems, the recession took hold in 2007 and housecleaning became a discretionary service people didn't need. “We came over here at the worst possible time,” Melley says.

But Melley was not a neophyte entrepreneur, having owned and operated a hotel in York, a historical city in northern England. It took four years, but Melley gradually rebuilt her home- and office-cleaning business. Today, Naples Maid Service has 76 clients who pay from $95 to $150 per cleaning.

Off to Naples
The youngest of 15 children, Gilly Melley became an entrepreneur at age 17 when she and her husband, Sam, started selling returned goods they'd buy at a discount in market stalls and a shop in York.

In their early 20s, in addition to the shop and stall, the young couple bought a four-bedroom house that they operated as a bed-and-breakfast inn in the historic city. “We had a plan that by age 40 we'd have it all paid for,” she says.

Eventually, the Melleys acquired two adjoining properties and the 250-year-old property called Lynton House became a 16-bedroom hotel. Later, they combined some of the rooms to make it a nine-bedroom inn.

With three young boys and their business prospering, the Melleys enjoyed vacationing in Florida. It was on such a trip in 1995 that the Melleys stopped in Naples for the night. “I said: 'I don't want to go anywhere else,'” she recalls. “From then on we came every year.”

Then, after 27 years in the hotel business, the Melleys decided they wanted to start a new life in the U.S. They had saved enough money to buy a business and a home in Naples. “Before we're too old, let's do it,” they said. “I knew there was opportunity.”

Using a business broker, the Melleys found a cleaning business for sale. Besides paying $100,000 for the business, they had to spend about $8,000 on legal fees and endured five months of background checks and pilgrimages to the U.S. embassy in London for interviews.

Moving to Naples
Once the Melleys acquired the Naples cleaning business, the former owner never returned phone calls and employees weren't cooperative. The former manager persuaded customers to abandon the new owners before Melley had a chance to speak with them. “We brought the police in and they said it was a civil matter,” she says.

In their third week in Naples, a 96-year-old man crashed into the Melleys' car, sidelining the couple for two weeks. The setback allowed the former manager time to take customers away and undercut the Melleys on price.

Background checks on the remaining employees turned up more problems. “It was a stack of dominoes,” Melley says.

The economy didn't help, as the Gulf Coast of Florida experienced the real estate crash. “What have we done?” Melley wondered. “We came over here at the worst possible time,” she says.

They had few friends in Naples and the couple never told their relatives in Britain about their fate. “I sat in my bedroom for six weeks and cried and cried,” Melley recalls. “I felt I should have seen this.”

Out of the hole
Despite the ordeal, the Melleys never considered returning to Britain, where their eldest son was still managing their hotel. “I like my life here,” Melley says. “America doesn't know what they have; they need to stop knocking it.”

Melley gradually rebuilt her clientele, first by putting flyers in newspaper boxes outside the homes in her neighborhood of Kensington. She left flyers where residents put out their trash to be sure people lived there. She called her service Kensington Cleaning. “That's how I first started getting my clients,” Melley says.

Meanwhile, Sam Melley became a Realtor and knew which houses had recently sold, figuring that the new residents would need cleaning services, too. It was shoe-leather marketing; “No fancy Internet blasts,” Melley says.

Melley always makes sure she shows up at every cleaning job. “Whoever's home it is, they always see me,” she says. “I do it along with the girls.”

All that stress took a toll on Melley, however. She suffered a heart attack earlier this year and has no health insurance to pay for the $70,000 health-care bill.

Fortunately, the business is starting to show a profit. Naples Maid Service now has 76 clients. “It's a struggle, but it's worth it,” Melley says. Although she doesn't look back, Melley says she'd have double the clients today if she'd started with the original list.

While she declines to disclose sales figures, Melley says she hopes to double her business. “We can never retire over here,” says Melley, 52. That's because the visa they have is tied to the business. And anyhow, their hotel in York is now for sale even though its value has dropped by half.

Besides, the Melleys say they'll have to show a profit when they go to renew their visa next year. “We've been to hell and back, but we still love Naples.”