The Entrepreneur: Lahrie Mohamed, LMSL
The East London property developer discusses following instincts, the 'college of life', and why budding property entrepreneurs should "tread carefully"
Founder and chief executive: Lahrie Mohamed
Description in one line: LMSL is a well-established property and investment development company operating in East London.
Previous companies: Galliard Homes; Stow Securities Plc
Turnover: LMSL property portfolio currently valued at £55.8m
12 month target: Strategic target of 40% growth per annum
Describe your business model and what makes your business unique:
- Our business model is based on steady growth and top-quality portfolio management.
- We always look to find new and innovative ways of raising finance, which puts investors first.
- Our knowledge and experience of East London’s property market also makes us unique.
What is your greatest business achievement to date?
It’s the satisfaction of seeing a business that I nurtured from its earliest days grow into what it is today – a firm with an entrepreneurial ethos which is underpinned by respect for the tenant, and with innovation at its heart.
What numbers do you look at every day in your business?
Quite simply, each day we assess how the rental income stream is looking over the next few months.
I also decide with my wife; LMSL’s managing director, Shehara Lahrie, what our plan should be for the coming week. From LMSL’s earliest years, her views on what our commercial strategy should be have been invaluable and our current success would not have been possible without her essential contribution.
To what extent does your business trade internationally and what are your plans?
We don't trade internationally and focus our efforts on UK growth. We operate across East London – principally Walthamstow and now our latest development, the Magistrate’s Court in Barking.
Describe your growth funding path:
As with many businesses, until recently we’ve traditionally sought to use bank loans in order to raise finance for our developments.
But (and again as many other firms have found) not only are banks now more reluctant to lend, they also take an excessive cut of the eventual return. Which brings us to why LMSL has now adopted a slightly different approach.
By launching the East London Property Bond via crowdfunding platform CrowdBnk, we wanted to spur investment in East London’s property market while offering a higher rate of return for investors than that provided by banks. So far we’ve seen substantial interest in the mini-bond, and this is underlined by the fact we’re rapidly approaching our £9m target.
What technology has made the biggest difference to your business?
The rise of the smartphone. By providing the opportunity for me to manage our portfolio (which stretches over 160 properties), this has been an innovation that has embedded a day-to-day efficiency into our business practices.
Where would you like your business to be in three years?
We have an ambitious – but achievable – growth strategy for the next few years. LMSL Group seeks to produce 40% growth per annum. By no means will this be easy, but our commercial track record and reputation are just two reasons why I am confident that we can hit this target.
With respect to specific areas of growth, although we have previously experienced success in Walthamstow, we see Barking as a key region for new developments. The buy-to-let market is entering a more turbulent phase following the chancellor’s changes to mortgage tax relief but we believe that Barking is one of a number of London districts which will see an influx of new investment over the next decade.
What is the hardest thing you have ever done in business?
Making sure I follow my instinct when I find that an investment is worthwhile, when others have urged caution.
While it’s essential to have people providing advice to me every step of the way, I feel that it’s always important that a CEO takes ultimate responsibility for everything that affects his or her business. With this in mind, it’s crucial to stay on track, remain focused and be prepared to take risks where appropriate.
What was your biggest business mistake?
Overlooking the people side of my business. When you’re concentrating on driving the future of your business, it’s easy to miss the fact that not everyone reacts to the same incentives or motivation as yourself.
It wasn’t until the last few years that I fully understood the need to embrace empathy in this regard, and now make a conscious effort to get to grips with what drives those around me.
Piece of Red Tape that hampers growth most:
As an industry, the buy-to-let sector has a big paper trail compared to 20 years ago – when I first became involved in the sector.
In terms of finding tenants, perhaps the biggest obligation on landlords is to check whether residency requirements are being met by those who will eventually move into a property. When you look into the costs attached to the process, it becomes very prohibitive for those starting out as buy-to-let landlords.
What is the most common serious mistake you see entrepreneurs make?
When I see or read about individuals who bring a business to market purely for the purpose of meeting the bottom line, I always feel like telling them that enthusiasm needs to lie at the heart of what they do.
In my early years in development, the biggest driver for me was the fact I enjoyed running the day-to-day processes of the business: liaising with tenants, exploring new opportunities and providing the highest quality management for our residents – all elements of my work which I still enjoy.
Newcomers should not underestimate the importance of maintaining that passion for your work because every business goes through tough times. It is how you cope with these tough times which determines how successful you will be.
How will your market look in three years?
In short, it will be a very different place to the commercial environment in which I began my career.
Ultimately, a lot will hinge on whether the government and builders are able (or willing) to meet the shortfall in affordable housing across the UK.
What is the single most important piece of advice you would offer to a less experienced entrepreneur?
If you are entering the buy-to-let market in its present state, tread carefully. While there are still many opportunities to build up a successful portfolio, the significant market growth that we’ve seen over the past two decades is likely to slow significantly.
In future those landlords who do not professionalise their operations will find it more difficult to compete in a leaner, tougher marketplace. Therefore, I urge anyone wanting to become involved in this space to put their best foot forward when it comes to the operations side of their business.
I started out with very little in the way of savings or spare cash, and as a result I’ve always tried to maintain tight control over spending. However the family holiday which I go on each year stands out as my main luxury, and certainly makes the long hours and worry very worthwhile.
Executive education or learn it on the job?
Initially I received my accounting qualification from the Chartered Institute of Management Accountants (CIMA), and then went on to enjoy several highly educational years at Galliard Homes and Mayfair-based Stow Securities Plc.
That being said, I’m a big believer in the ‘college of life’, and my experiences as a property developer have proven to be just as formative as any academic qualifications that I’ve earned.
What would make you a better leader?
In an ideal world, the ultimate power desired by any business leader: hindsight.
I try to read as many business books as I can get my hands on. Although sometimes their lessons aren’t immediately obvious, you often find that some of the insights only become relevant months or even years later.
At the moment, I recommend Steve Jobs’ autobiography. He achieved great things by never losing sight of what makes entrepreneurs tick; the eagerness to improve the day-to-day lives of their customer base.