Samuel Leeds Interviews Mr Saj Hussain
Samuel Leeds sits down with property expert MR Saj Hussain to discuss how to joint venture in property deals so you don’t run out of money. This is one interview not to be missed.
Samuel : Tell us a bit about what you do and your background.
Saj : My focus generally tends to be on finding what I call very good opportunities
and partnering with people who have got the money and sharing the profit. So it started off really with being in a place where I wanted to get into property but just didn't have the money or the knowledge. I started getting a bit of knowledge but actually having a bit of cash helps as well yes? or somebody's cash at least! I just really stumbled into a deal where it was a deal I was sourcing so that's when I started outsourcing deals initially and I was going to sell that on to somebody and the person whose property was the vendor he was about to get repossessed
And he was going to lose the property. We'd struck a deal, the person I was gonna sell it on to and he was a little bit unsure about the numbers and I was thinking if this doesn't happen
the sellers gonna lose his house and the buyers gonna lose out on what I think is a reasonable deal and I'm not gonna earn a fee and I've done all the work.
So in the end we agreed with the buyer I want to charge you a fee, I'll do the work,I'll get it up and running and show you the rent you're gonna earn out of it and that's really how I just stumbled into my first joint venture.
That's a number of years ago now and that would earn me about 47 pounds or something a month which we still have. I quickly realised actually I'm gonna need a lot of these before you know I can say I'm okay and then I started looking at a bigger projects and got more into HMOs so really HMO’s and professional lets in Birmingham is what I've been doing for a good number of years now and I tend to do big renovations on those, create really nice environments and using other people's money they fund them we get them up and running we do a profit share room and that really tends to be what I focus on and more recently being looking at some bigger projects and developments as well.
Samuel: I know you invest quite a lot of money on the refurb but you don't leave it all in there do you?
Saj: No! we look at financing strategies at the back end to get most of that money back out so the investors pretty much got most their money back out. They've got a little bit of money left in, they've got a really good return on that capital that’s still in the property and we've got properties that are almost brand new houses once they are finished.
Samuel: Buying a property, renovating it and pulling the money out is a really difficult one to teach isn't it because you can't guarantee exactly how it's gonna go?
Saj: Absolutely because there's so many variables that you just can't control but there are a number of things that you can and those are the ones you focus on
making sure you do the property to a good standard
Location so it's gonna let well
Somewhere where there's some good capital growth (potential in the future as well)
So you know these kind of things you can control and working on that I think is the importance.
Samuel: But it's a difficult one to sort of give a case study on at the crash course and just say this is how I did it go and do it and there's people that do that, there's people that make it look so easy…..
Saj: Yes and it just isn't it's hard and there's a lot involved, some people gloss over it
you know.They make out it’s just as simple as you buy a house and you spend some money on it, you then refinance and then get all the money back and you are off on to the next one.
Samuel: So tell us in regards to joint ventures what would you say the number one step is to being successful ?
Saj: I think having a clear purpose in terms of what it is that you're trying to achieve, it's really important .
Samuel: Sometimes it's so painful letting the property go isn't it? You know you find this deal and you know you're gonna get paid like two or three grand or whatever it might be but
passing that deal on someone else and knowing that they're gonna become financially free from it and you're gonna make a few thousand pounds it's quite painful!
Saj: Definitely but you can't buy everything. Sometimes there's lots of good deals out there
that you think well you know I'm taking this one for myself and I've got these other two what do we do with these or if you are sourcing them on for a fee you know you're able to kind of reinvest in the business, in marketing and you can continue to do more. You're helping people that want to sell and you're helping investors that want to get on the ladder and buy aswell. So it’s a win-win but it's painful sometimes. You're potentially given a huge amount of profit to somebody else.
Samuel: What advantage would you say there is to joint venturing rather than raising the finance or just passing it on for a fee?
Saj: I think that the real benefit from my perspective in terms of joint venturing is that you're
leveraging something from somebody else so they're bringing something to the part you're bringing something. Ultimately you're bringing time, probably some skills, some experience and the project and what you're looking for them to bring in these examples is they bring the funds. If you've got an investor's giving you a hundred thousand pounds you're putting say twenty five thousand pound deposit so that's for housing then you've run out of money again but this way you can just keep going as long as you're producing the result and it’s working well there's no shortage of people that you can find that will want to work with you. If you've got a track record of making money.
Samuel: So is joint venturing something you've been doing a while?
Saj: Yes, so I've been in property, this is my 11th year coming up to 12 years now so I started around about 2006 just when the market crashed and everybody was running away and I thought maybe a good time to run in or not! If i’m being honest the first two years
was a real struggle, really hard work and I wasn't really getting any results I was just trying everything and just not getting anywhere but then you know that the shift really came when
I found somebody experienced who knew what they were doing who literally took me under their wing and kind of guided me along and being a environment where you've got the support and you've got somebody who's done what you want to do and I think a lot of it was confidence. He gave me the confidence and I actually learnt that I can do this rather than being out on your own not too sure it's terrible you know. My background is in IT, I ran an IT company for 15 years and one thing we did was kept our knowledge on our cards close to our chest. Don’t share information because that's really what you're getting paid for, that's how you earn money out in IT and that's certainly what it was for us then actually when you come into property people are so open and so helpful and supportive of each other and that was a complete culture shock for me.
Samuel: You said the first couple years was a real struggle, learning Lots but a struggle. When did you really have that breakthrough with results?
Saj: The breakthrough came a couple of years later when I just felt like I was doing the right things but just not getting the right result. Yes I thought I'm doing what i’m supposed to do and I'm telling the seller that you know I'll take your mortgage on and you can go on and we'll be sorted and you know I'll give you a pound for it and that's what they told me to do but it just wasn't quite working and realizing actually it's more about people understanding people it's about the relationships and I think that when the biggest support and the biggest gain I got from my mentor the shortest period of time at that moment was the understanding this is about people. So whether we working with sellers and we're helping them or whether we are
Working with investors equally there are challenges that they have and we're trying to help them. So a seller might be in a situation where they need to move on with their life and you're finding a solution around their property and invest if they've got 100 thousand pounds sitting in the bank and reality is it's a problem because it is dwindling in value they put it somewhere they need somewhere where it's gonna be safe it's gonna give them a return. Ultimately it’s all about people and relationships and that was the lightbulb moment for me.
Samuel: What would a typical case study of a joint venture look like with you?
Saj: Typically I tend to buy properties in Birmingham, prices have increased in the last couple of years big time. You saw our cookie cutter approach we used for a long time was we were buying at about one hundred and forty thousand pounds for a property we spend about 60 thousand pounds on it so you are up to about two hundred thousand pounds and then we'd refinance to 260 to 270 on a commercial valuation so we pretty much got the property, put six ensuites into every house. It is a major renovation and what that also means it runs smoothly than afterwards as there's very little in terms of maintenance cost going forward but then there's enough there for us to be able to refinance and take most of money which varies massively with the lenders in terms of their criteria and what it allows
you to take and your history experience. All these things have a factor because I work with lots of other people and sometimes a property might be saying the investors name and you know I'm sitting in the background just getting it all done and we've got an arrangement in terms of how we can have a profit share and on that basis when they're mortgaging it's
looking at that individual as well as their history so there are lots of lots
of variables but it's doable but it's not scientific. You can’t say I'll do this this and this and it's gonna produce this result.
Samuel: Would you say that every deal was different on a case by case basis? Like is the joint venture partnership different?
Saj: Well they can be but I tend to take a fairly simple approach to these things and the way I tend to do it is I ask the investor to to bring all the cash for the project and I'll pretty much do everything else and we'll share the net rental profit we create each month on a 50\50 basis
and any equity that we create in the property that'll be on 50% each as well so it's very simple straight down the line but the money that they put in is their money that's their money so for example at let's say it was let's say it was a two hundred thousand pound project we just
Created say 60 grand of equity in it that's 30 grand each for your equity that 200 grand that was in there that is still theirs.