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Co-Living HMOs That Supercharge Your Profits w/ Stuart Scott

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Transcript

Speaker 1 0:01
The purpose of wealth talk is to educate, inform, and hopefully entertain you on the subject of building your wealth. Wealth builders recommends you should always take independent financial tax or legal advice before making any decisions around your finances.

Christian Rodwell 0:19
Welcome to Episode 223 of wealth talk. My name is Christian Rodwell, the membership director for wealth builders joined today by our founder Mr. Kevin Whelan. Hello, Kevin

Speaker 2 0:28
Cruz, good to be with you again. You've got a pocket rocket today, haven't you?

Christian Rodwell 0:32
We have got a fantastic guest today. Yes. And we're focusing in on the strategy of high end HMOs. And today's guest is Stuart Scott, who is a multi award winning co living HMO developer. And he works in the Brighton Hove Worthing and East born area in the UK. And he's also the founder of the CO living revolution, where he's written a book. And he's all about creativity, innovation, and disruption in the HMO market.

Speaker 2 0:58
I was listening to the interview, Kristen, wow, I mean, which you can unpack that there's like little powerful kernel seed that just gives so many lessons. Very interesting for our audience. They know that we do these things now. We can like to listen in, we then do a debrief, don't we, and try and pull it apart a bit to try and help people find the lesson that they can act upon themselves. And I got too many. You know, I was like scribbling away go, wow, that's an interesting idea. That's great idea. Look, I've I've shared the stage with Stuart on more than one occasion. And you can tell Kanye, he's just good at what he does. You know that you feel the passion? You feel the purpose. You feel the coherent argument, and that he's thought this intentionally and on purpose. There's nothing accidental with what Stuart and his business colleagues are doing. So yeah, be it's a really interesting episode. And you've hinted Chris, something else to follow the aparthotels, and so on, which, again, is another interesting strategy, with tax benefits and other benefits galore. So yeah, it's going to be a good one. So fasten your seat belt and get ready for the ride, because she was going to take you on one

Christian Rodwell 2:20
that said, keep listening as well, because we've got some freebies in this episode, and we'll share details within the conversation was, how to get your hands on a copy of his book. And when we talked about entrepreneurs, Kevin, it really is about thinking outside the box. It's about finding opportunities, spotting problems, and things. Just a great example of how he spotted a problem that existed in this market. And he's absolutely attacked it and been hugely successful. So I guess, time to head on to our conversation today with Mr. Stewart Scott. Stewart, welcome to wealth talk today. How are you?

Unknown Speaker 2:54
Good morning. Good to see you.

Christian Rodwell 2:56
Yeah. Good see, to really pleased to have you with us, Joe, we're gonna have a great conversation today. Find out more about you and your company, and some of the great work that you're doing with high end co living HMOs and your multi award winning as well. So you're certainly a man who knows this stuff, Stuart and looking forward to understanding your story. So let's begin there, shall we and find out a bit more about what got you into the property sector and tell us a bit more about CO living HMOs

Speaker 3 3:23
well, so my background was that me and my wife were serial renovators, we renovated our way up the ladder. So that's how I started I started by as most people did, you know, I live in Brighton and Hove very expensive place. The only way if you want to get to where you want to go, is to renovate the way okay, unless you've just got endless pots of money, you need to roll your sleeves up and and get stuck in what we did. So we were serial renovators, and we would renovate our way up the property ladder. And then we started buying buy toilets. Okay, so I was flipping, I was buying them, renovating them and flipping. So you know, like my background was really self renovator working out the ladder and always living in, you know, renovations and also flipping properties. While I was doing all of that, I built and sold two companies in Brighton and Hove one was a marketing agency, which I built up, and then I sold that and then the second company and I was the creative director in there, as well as the CEO of that. And then when I sold that I helped build another product company and product innovation company. So across all that period, I was head of innovation if you like so I was coming up with the concepts, the ideas, and then and then rolling them out. And so all the time I've been building those companies, every time I was making dividends and I was making the returns at the end of the year, I would invest that money into property. So I would go out and I buy a two bed flat and then I'd add another bedroom or I'd buy a house in the night and then I'd renovate it. You know, I'm talking about basic level single let's and I had a golden rule. The golden rule was I never bought a single lead that I couldn't add value to because otherwise I'm just writing the market. So very quickly I understood how to make money from property. And then eventually when I sold my second company I moved into property for Old time. And it was at that point, I realised that single x was going to take me way too long. And so I looked around, you know, went to networking events, and I realised there's this world of called HMOs. I was like, Okay. And the irony being that when I grew up in Brighton and Hove I was living in HMOs, I didn't think they were called HMOs. I didn't think they had licences. But I know that all my friends were living with me. And I remember that, you know, obviously, I'm still friends with those people, you know, socially, we were living in HMOs, I grew up in HMOs, I just didn't know that. That's what they were. And then I discovered from an investment vehicle perspective, that's where I needed to look, I needed to go from low yielding low cash flow to high yielding high cash flow. And so that introduced me to his quote of HMOs. And as someone from a creative innovation background, back in 2014, I could see, wow, this market is wide open. Because at the time, everything's vanilla, there's no there's hardly any competition here, that the product is low quality. As far as I could see from from someone looking at it from a product, I was just like, wow, this is great. I'm just going to drop in a disruptive product into the market and see if I can break the rental ceilings and create a product that everyone you know, wants to live in. And so really back then it's over 10 years ago, now, that's when I was in the right place at the right time, from an innovation background. And I was helped, I was able to help kind of pioneer this new type of high quality co living HMO, which is more focused on community design product experience,

Christian Rodwell 6:28
which led to the founding of the CO living revolution in 2015. So tell us, what's the mission was the concept behind co living revolution,

Speaker 3 6:38
it was very simple. When it started, I saw my company and I'd left and I wanted a new purpose. And I knew I needed to build assets, and weight. And you know, the purpose initially was very in year one and two, it was just disruption, literally, disrupt, use all my skills, create the very best products that I could, using all the things that we would have done in the agency world, and disrupt the market. And I knew that I was gonna get a lot of stick for it. And I did on social media, the amount of abuse I got from people saying social spaces, don't work vanity projects that are there. And you know, and eventually, you know, you fast forward several years, those same people were imitating my work, you know, if you're gonna be on the front line, you've got to expect to get some flack. But you know, in the first couple of years, the the mission was simply to create absolutely fantastic products to really focus on customer experience, and disrupt the market simply by dropping in more advanced products into the market. That was in first few years. That was pretty simply what the mission was.

Christian Rodwell 7:43
So talk through those early properties that you first purchased, which were HMOs, what were you doing differently? So how they look? How would they feel?

Speaker 3 7:51
Okay, so the first thing we did is again, because remember, I wasn't coming from that world, it wasn't like I had any biases on what a HMO should be, or what vanillas vanilla hmm, should be. So as soon as I was looking at the buildings, I was reconfiguring them based on looking for the right buildings where the rooms were decent sizes, we were designing the usability of the room, not just it's got to have a wardrobe of bed and everything else. Well, okay, if you've got to store all your stuff, and we think, try and work out how much stuff you've got, what storage do you need, what comfort levels? What can we do to improve it? We were I was kind of thinking like a hotel, I was thinking, Okay, how do I get the comfort levels, I don't get the right mattress, how do we get the right space, and then the seating areas, the storage, TV, opposite the bed, all these little usability things which throwing in a basic three piece set from Argos is not really cutting it to the same level that you'd expect a high quality hotel to provide for you. So we were kind of using that same mindset of really thinking through the usability and the design, and really going into a lot of obsession on the detail of the schematics, the layout, the usability of the space, then on the design piece, which is not usability that's now aesthetic, we were really pushing the boundaries of that kind of what we could do with the visual side so that we could create just a really immersive space. And when I when I say immersive, what I mean by that is, imagine walking into your favourite coffee shop where you walk in you go, wow, this is amazing. I love being in here. Obviously you love the coffee and everything else. But just the space is just inspiring to be in well with social spaces. That's what we were trying to do. This is a solve problem in restaurants, coffee shops, bars. So we would bring in a lot of that focus on experience from various different non HMO sectors if you like bringing it in to create these really high impact inspiring social spaces. We're also breaking out areas like cinema rooms and you know the outdoor space and seating areas and the barbecue zones and all these co working areas and co working zones. These are all areas that even in the business, you have what's called breakout spaces where you have these little areas where people brainstorm together, and they have little sofas and little pods is out there. But it really wasn't in the HMO space. So that's why we were very rapidly experimenting with things in the HMO sector.

Christian Rodwell 10:16
So to create a nicer space, I imagine there's more cost involved in going into that. But of course, then you are able to charge more. Yeah, in terms. So let's look at some of those benefits and how that all plays out.

Speaker 3 10:28
Yeah, okay. That's an interesting one. Because, you know, I do a lot of public speaking, and I speak a lot of events. And the question sometimes comes up, well, what's the difference compared to vanilla? If I just did vanilla? What would be the difference? Well, firstly, I wouldn't do vanilla, because it's way too risky. Why would I wouldn't spend hundreds of 1000s of pounds and drop a vanilla product on market and just hope that I don't get any competition. That's way too risky from a due diligence perspective. So I wouldn't really risk doing that. But most of my projects I define, so when I, when I share my kind of numbers and stuff on certain projects, the definition of successful project is the ROI, the cash flow and the money left in, if you had, for example, a project where the ROI was 6%, and your cash flow would 400 quid and you've got a crazy amount of money left in the deal you can get, I think, Stuart, you've overspent on your refurb there. But you know, if my ROI was 30 40%, and I got a decent cash flow, and I haven't got a lot of money left back in the deal? Well, it's a fantastic deal. So it all comes back to those three numbers. So really, it's the numbers on the back end, aren't good enough, I'm not gonna do the deal. So I'm never in a situation where I've overspent on a refurb, if that makes sense, because if it affected the ROI, and it dropped the ROI beyond what I'm comfortable with, I wouldn't even do the project. So it does cost more to do some of those refurbs. Yes, but then I'm breaking rental ceilings. So I mean, some of our rooms, you know, heading up near 1000 panel rooms, so I'm getting a margin. And that margin, which is useful for your audience to know is usually about 20 to 30%, more than vanilla. So from a pure financial perspective, from a pure strategic financial perspective, I'm ensuring that my income is 20 to 30%. More, I'm ensuring that I've got high demand, and I'm ensuring longer term occupancy and less voids. So from my perspective, that is worth every part of that investment putting in there. Because I'm not worrying about whether I'm filling those rooms, I know I've got the best rooms in the areas. So I don't have to that's not even a worry for me. Yes. And

Christian Rodwell 12:35
that's I can imagine those that are living in those spaces are also recommending to friends who are looking for places as

Speaker 3 12:42
well as so many so many upsides. And I think that, again, just to give real value to your audience here is the market is always going to change, okay? Every single year, new people are going to come into the market, new people that do not come from the HMO market don't come from the buy to let market, everyone always brings in different perspectives. I was someone who brought in innovation and brought different spectrums. And that means that competition is always coming. So you've got to be able to invest in making sure you're an edge in the market, there's got to be an edge, you cannot write the market. And I'm making the assumption, most people that are listening, they have portfolios, and they gotta hold them for decades. Okay, so if you're going to hold this for decades, you want to make sure that you invest in your product so that it can operate at a very high performance level for those decades.

Christian Rodwell 13:24
And with HMOs, there's obviously different tenant types as well as Joe, so who were you aiming out? Or who were you aiming at at the beginning?

Speaker 3 13:31
Well, I've always stayed with professionals. I haven't done students, although I've helped. I've helped a lot of people who do student student HMOs I've got some good friends that have quite sizable hedge student hmm, portfolios, and I've helped them create the best in their area and break their rental ceilings. But I personally have always stuck to professionals only because I can remember what it was like when I was a student and I'm not quite ready to remember what my student houses like when I was in the student, not professional student centre. I didn't want to babysit people for their first time they've ever putting the litter out. My target audience is simply me, us. For for children, it's before you settle down before you have children. But you've you've got a good job. And you just want that social aspects before you are ready to fully settle down. So that's really my audience.

Christian Rodwell 14:20
So this has escalated somewhat since 2015 When you started obviously with your own properties and you're now inspiring existing landlords to really embrace this and educating new property investors in the market and working with investors yourself to grow your own portfolio. So tell me a bit more about how this has now branched out to help other people.

Speaker 3 14:40
I created the Cuban revolution. So the Cuban Revolution was really I speak a lot of events. I've been doing a lot of public speaking since over 10 years now. That's been my kind of route to meet people and inspire people and and do that kind of side of things. And then number of years ago I started the Cuban Revolution. The Cuban Revolution was really where I helped to train and mentor people how to safely and securely learn how to do their area of research, understand how to stack and analyse coding HMO deals, how to create schedules of work, how to create the operations and how to create the product create that kind of high quality product. So I'm, you know, I'm working with, you know, hundreds of landlords every year, and developers and investors were basically and training and mentoring them, how to basically get into high quality co living HMOs, and how to build that portfolio because everybody's coming into that market for a different reason. Most of what I see is people transitioning from Vita, let to HMO. Okay, so they're transitioning from a traditional low yielding portfolio, which right now with the interest rates is taking a bit of a hammering, and they're looking to diversify into HMOs. And they want to know how to do it, and they don't want to do low quality. So they know they want to do high quality straightaway. And then I've also got other experienced developers who have other strategies that want to diversify their income streams, so that you know, developers that do flips, or that's lumpy. They want bits in between, they want that consistent money coming in. So I work with lots of different people that are looking to kind of diversify into, into into that kind of area.

Christian Rodwell 16:11
Is there any difference for some news in buy to let the moments do and they're looking to get into HMO when it comes to finance in the traditional methods of bank lending,

Speaker 3 16:18
while the lenders are different, compliance is different. Okay, so straight away from biter let's to HMOs, you're dealing with different compliance, and the lenders that have the appetite to lend. So if you imagine that you'd have a lender that would just lend on a two bed house through that house, what would HMOs you've got different lenders, and you've got different products for what I call the in acquisition, and different products for what I call the exit, which is like the long term. So imagine you're buying a building, you're refurbishing it, and then you're and then you're turning it from a three bed house to a six bit HMO, then you're owning it long term for however long afterwards, well, you need a product to get in to do the works, then you need to refinance it at the higher value, pull some money back out, and then go on to your term product, which is your long term product. And the long term products, there are different lenders, and not only are there different lenders, I want to throw one another little bit of thing into the mix here, which is quite useful for your audience to know that when we get to exit, and then term lenders, there are different ways to value the building, there is a bricks and mortar model, which is usually up to about six bedrooms, or you've got highly adapted buildings, or mixed use or sui generis, which is seven or more people in the building, where you start to move to what's called an investment valuation, where it's done on the multiplier of the income, not the bricks and mortar. So again, very strategic ways that we can, in a certain key area that you're investing, we can flip the valuation model. Okay, it's just a tool. It's just a technique. But it's one of many different tools we have in the toolkit for to be able to work that to our advantage. Yes, no, no, just as investors, you know, because everything is all about angles and tools, and techniques and angles and tools. And you know, there's there's many of them, but the valuation model, and the way you tweak that can sometimes make the difference of the deal working or not, no, that's

Christian Rodwell 18:08
a great point. Thanks for sharing that shirt. Now, you know, wealth builders, we advocate diversification across many pillars as possible, and we refer to assets as pillars. One of the popular pillars for in property investors is leveraging their pension and wealth builders, we obviously helped hundreds people to create SAS pensions. And I know, this has also been an important area for some of your clients as well, Stuart. So talk us through how some of your clients have used their pension to help them purchase property.

Speaker 3 18:38
Yeah, of course. So I mean, well, there's two parts clients. So on the on my, on my journey, building my portfolio, I worked with a lot of investors building it, you know, on fixed term basis, so that like fund the projects that I'm working on, because you know, even though I sold my business last started with money, I remember the very first conversation I had with a mentor was, oh, you need to be planning for running out of money, which seemed crazy after I've started with a pot of money, but you know, they were right, because eventually your money will run out, and you need to find a way to basically be able to work with investors. So anyway, along my journey, over 50% of the investors that we've worked with over the years have been SAS, SAS based investors. So one thing that's useful for your audience to to know is that there are a lot of developers out there and investors out there, and a lot of people with SAS out there that equally have the same problem. Because SAS people have to contain it can only they can only loan back 50% to themselves, and of course the other 50% they need to go out and find trusted people, because that's the key thing. It's all about trust. At the end of the day, you're working with someone it's not really about getting the highest return. It's about working with a really trusted partner that's going to deliver and execute and get your money come back. It's kind of like kind of a key main thing we were aiming for there. So really, there's there's that opportunity there and a lot of people miss the fact they think everybody's a cash investor. What you know, actually, my experience has been very different. actually think there's, I've actually met more SAS investors than I have cash investors. So that's useful, useful to know. And then so that's just on the journey of working with investors. But on my training company, the COVID revolution, many of the people that I work with there are utilising their own sasses to lend money to help them finance their projects to build their portfolio. But equally, they can then use their money to buy commercial buildings as well. And I think we talked about this earlier, which is you can't hold residential in a SAS that is an absolute no, no, you can't do that. But what you can do is you can buy commercial, okay, so you can buy commercial building, you could sell off the resi part, there's lots of bits that you can do, you can either lend some to you lend some to yourself, or your own company, or you could, for example, buy commercial, that in turn could be you could do some work, too. So there's lots of clever things you can do there. And so that so SAS has been a very consistent part of my journey.

Christian Rodwell 20:58
What are some of the other benefits? Are there anything that we've not mentioned about CO living spaces as to why someone right now might look at this as a strategy? Yeah,

Speaker 3 21:06
I mean, interest rates, okay, so let's think about the market is isn't at the moment. So we're in a period where, you know, okay, interest rates are higher, you know, and we're probably not going to come back to the world that we had before of the ultra low rates, they're probably not going to come back down, and they probably will come down, but I don't think they'll go down that low. So we've we're in this peak pain point, if you like, which, and the net effect of a peak pain point is by two letters really struggling. Okay, so traditional bytes, that's really struggling. Now, if you've got bytes that as a pension plan, well, okay, you're not probably not making much in the way cash flow out of it, or it's locking a load of money, or when you refinance, you might have to put money in, which is not an ideal scenario. So really, what we're seeing is we're seeing a pivoting, of people investing their funds, their money, their portfolios, and diversifying, not necessarily selling off but diversifying their income streams to more high yielding high cash flow strategies. And that's where HMOs and CO living HMOs come in, because most people now and of course, most of your audience who are thinking of pivoting and diversifying into coding HMOs or instant that just the HMO market probably don't want to do vanilla, they've probably looked at the market and realised that probably don't want to do a low quality one into the market at the moment. And so as they look across, that's why some of the best opportunities at the moment, we've got the two key opportunities in the market right now, you've got short stay serviced accommodation, and you've got HMOs. If it's HMOs, you want to be high quality, because you for the reasons of getting the right kind of tenant types, achieving the high returns and the yields and everything else. It's co living HMOs service accommodation. Problem with that at the moment is we've got legislation about to drop on the whole market. So of course, that's a massive uncertainty right now on service accommodation. So you would not drop anything on service accommodation into the market now until the government announces in 2024, these restrictions with its planning restrictions and everything else and the use class changes. So we want to wait and see what's happening with that legislation. So suddenly, you've got two high yielding strategies, you've got your HMOs and COVID, HMOs. And then you've got your service accommodation, which of course has uncertainty at the moment, which then means that go living HMOs people always need somewhere to live. That's why that's one of the best strategies at the moment to get the high cash flow. And

Christian Rodwell 23:27
another strategy, which perhaps there's more to talk about, and we can do a second episode is around apart hotels.

Speaker 3 23:34
Yeah, we're gonna do a separate one purely on aparthotels. But just to give your audience a little bit of a teaser on this, which is I have my diversification across two niches. The main niche that I'm known for is CO living HMOs design LED high quality coding HMOs for the high yielding in serviced accommodation since 2016. We've been running multiple apart hotels, and those apart hotels are C one buildings under the C one use class, which means that they're fully supported their hospitality bit like guest house b&b and hotels. We've been operating acquiring them, operating them funding them and refinancing them end to end on those buildings and they are not affected by legislation. In fact, they will do very well out the back of legislation as well many hotels because you know the whole hotelier industry is gearing up for a very big bounce in the market. So yes, apart hotels is really a diversification so I have for example my base if you like of CO living HMOs and Vita let's which is kind of core basically like everyone needs somewhere to live and then my short stay which is the equivalent of what I was doing the service accommodation, I sold off my service accommodation and I have apart hotels and apart hotels are secondary power. They are affected by the market. You know You can get really high returns, but equally what happened in COVID? Market shut down. So you know, you are more sensitive to market fluctuations. So higher returns high risk is basically kind of thing that says high returns high risk. So apart hotels are really my diversification so that not all of my income streams come from the beitler. And the hmm, market. Yeah,

Christian Rodwell 25:23
well, I would love to have you back to talk more about that, in the new year, Stuart, and you've written a book co living revolution. I mentioned award winning as well. But there's the book on screen for those of you watching the video. Very nice indeed. And Stuart, you've kindly offered to send in the post actual physical copies for three lucky winners. In the post, yep, yep. So if you'd like to win a copy of the code, living revolution book, drop us an email, as quickly as possible, send that to Hello at wealth builders dot code at UK and put CO living revolution book in the subject line, and the first three people will receive a copy of that book directly from Stuart. So thank you very much for offering that to our listeners. That's so just to wrap up, you know, well done. And congratulations on everything you've achieved. So far, it feels like you're on a great path. And I just want to mention those awards, because you must be very proud back in 2018, property investor of the year, also HMO deal of the year and you know, both of those were property investor awards. And then at the National li s awards, you won property developer of the year in 2019. Talk us through, you know how it felt to pick those up.

Speaker 3 26:33
I was I was up against some big guns on that one. I mean, I was up against some very big companies, you know that at the end of the day, I want it on innovation. It was not about scale. It's about innovation. It was about basically just as I mentioned to you the mission at the start, which is disrupt the market, change the market, simply by basically being in the market, and helping causing that change to happen around you. It was very much for disruption that was doing in the market. And you know, it's nice to be kind of recognised for creativity, innovation and driving and driving change in the market. So we all need some form of recognition. And in some ways, it's great to over a pat on the back for driving change makes you want to disrupt it even more.

Christian Rodwell 27:15
It's been great speaking with you today. Thanks a lot for sharing all of this with our listeners. If someone would like to check out what you're doing head to our website, socials, where should they head to

Speaker 3 27:23
the column revolution, if you just Google www.va co living revolution, credit UK, you can get directly through to me there. So that's my main website there. The Book link is also on there as well. So also, that we are writing the pipe to revolution book as well. So that is in production.

Christian Rodwell 27:40
Fantastic. Thanks so much. Bright information there from Stuart lots for us to discuss, Kevin. Before we do that, let's head on over to Trustpilot. And we've had a great review come in from Diane this week, who says I have been with wealth builders for six months and their customer service support and encouragement has been exceptional at every step from the initial engagement to the execution of my SAS plans. I could not have come this far without them. Any questions are answered promptly and professionally and they really challenge your thinking at every step to ensure that your plan is optimised. It has been a real pleasure to work with this company. And I would highly recommend them. I did not leave many reviews but felt compelled to leave one for wealth builders sincere thanks to the whole team, a star service. Thanks, Diane. Very

Speaker 2 28:30
nice. Thank you very much, Diane, it does mean the world to us when people do take time out. And you're one of the challenges of busy lives, busy jobs, busy businesses, is people rarely take the time. So thank you, Diane, for taking the time. And can I implore you as well, if you're listening and you've been listening for a little while now, and you think is interesting this you know, we've we've done a few episodes, there's some interesting things you can think about acting on but take some actions, the key is in the moments of deciding and then taking action to things up to go together, that your financial wealth is completely changed forever. So I'd like you to take a small teeny tiny action, whereas maybe it's a little gift and run into the festive season. Just tell someone else about the podcast or take one moment, even if it's just really loving the podcast guys to send us a review. It's like a little gift waiting to be on Route. And we need to do that. And we've got someone wrapping to do with Stuart right?

Christian Rodwell 29:35
We have indeed, well, I'll just give the URL if you do wish to go and leave a review head to wealth builders.co.uk forward slash reviews. That's a nice easy way to drop us some kind words and your rights do it is someone who's definitely an action taker and he was a business owner. So I think it's a worthy note that he took the skills that he'd spent many years developing in his business which was, of course around design and innovation. And then he looked at a new marketplace, which was the property market and said, Well, how can I transfer some of these skills. And often, Kevin, we see some of our members who perhaps want to get out of the rat race want to change, and almost just kind of close off all those years of connections and experiences. And it's gold, which you can transfer across and use them a golden

Speaker 2 30:22
deed. The challenge often though, with looking for gold is you're looking out over the horizon into the distance and the gold is right under your feet. You're standing on a mountain of value mostly. And it's right below you. It's right where you built your experiences. And you can, you can hear Stuart's experiences, the business owner, action taker, innovator, disrupter, these are all interesting things. And he didn't mention that when you disrupt things, you've got to be prepared for different results, social media, he mentioned. And sometimes you don't get the result you want, because you're disrupting a new market, you don't have to be a disrupter to be successful. And in many respects, as you can hear from his experience that he's now passing on to others, he's done the disruption, you can just follow in the wake. So you do not have to be a disrupter to be successful. You just have to get started, not keep thinking about or should do this, or should I do that? Read this. But just one more book, just one more calls, just one more podcasts, find one thing that at least you can emulate, you can copy, you can model so that you can take some small action. And this is a really great one, particularly in an environment where right now you have to make decisions in markets don't your markets come and go. Wealth is about principles, but markets will change. And sometimes you have to step in, lean into the different market opportunities. And I think he's done that. But it's quite poignant for today's market. Because we've seen with the tradition of the biter let let's say the single lead market, with interest rates going higher and property prices having increased, it's more difficult to make maths work, as he called it sort of, instead of low, low cash, low yield, go for high cash high yield. And that's a sensible thought isn't it just means getting more. And that's what entrepreneurs do, they elevate the performance of something and turn it into something higher. And you can almost embody that and the point he made, which is I want to look at a property in a second I value. And it's the adding of the value, which is the essence of being a wealth builder. Because wealth comes from empowerment, and empowerment comes from making distinction. So you can take action. So if you resonate with steward copy with, you know, with what students doing, or, or reach out to steward or other people that you resonate with, who have got a message to share. And obviously, I know you've interviewed other messages, too, including the aparthotel market and so on. But let's concentrate on what he was saying today. And you know, you got some good lessons out of that, Chris, definitely thinking about how to get a higher return, and never settling. He called it vanilla. Actually, I quite like vanilla ice cream, I like vanilla. If I had a choice, I would have it. So I'm going to change the words if that's okay with Stuart, I'm not disagreeing with him. I'm gonna say vanilla in his mind. mediocrity, right? Don't settle for mediocre, don't do what the mass does. Don't be basically the same as everybody else. Because then you're not creating anything that's really uniquely yours. You're not creating anything that has extraordinary value. And you can see he's getting what what did he call it market leading rents, market busting rents. people queuing up to occupy any spare room that he's got on the existing tenants, doing a review, if you like by saying, hey, there's a space, you better jump in quick. And if you can do that, by creating something that's outstanding, you have to be the creative person, you can just copy somebody else. And there are so many people who we've had on this podcast before Chris, who have chosen a market but chosen to be outstanding in it. Now, the other point I'll make about markets are when you see opportunities, we often call this being outstanding in a niche, but choosing a very, very specific niche. So again, not general, not the niche, choose something and choose to be outstanding in the niche that you choose to operate in. So that makes it exciting, because you're not going to be I mean mediocre person, just doing average things. You choosing to add value become outstanding. Choose your niche. And what's interesting about niches if you think about the point that Steve was making, okay? He said, Well, I go for young professionals, and don't do students, right? That's fine. Absolutely right. That's his choice. Other people would say, I do students that don't do professionals, and that's fine, too. But the point is, he's chosen the transition that he wants to serve. You've heard me say before wealth is created in transitions as well. You can see when people have challenges and problems, and it's normally, when they're going through a transition, well, what are the students going through is a transition, they're going through from being a young adult at home, you know, with everything done for him, maybe to a young adult, in a place where perhaps, you know, they're running a bit freer and a bit wilder than they did at home. And I remember my student days, and I think I probably would reflect on that. And so did he, it, he said, don't really want that, I don't really want my properties in that transition. I'd rather when they have lived through that scene that actually they look back on it and want to be different. They want to be more professional, they want to be more responsible, they want to be proud of their environment, then he's chosen that as a niche, and I think that's great. So when you think about the niche you want to operate in, whether it's in business, whether it's your property, whatever asset you've chosen, think about the transitions of the people whose problems you're solving, and what it is about that transition, that you can then give them a better experience as a result of that. And Stewart did a great job of that, I

Christian Rodwell 36:45
think, now at wealth builders we teach our members are holistic process to building wealth. And what we mean by that, Kevin is that we don't focus on any one asset class, or any one strategy, that we have Seven Pillars of Wealth. That's the crux of our wealth building process. I think Stuart has shown diversification across many areas as well. So looking at business, originally taking money, profits from his business to put into property, which is another pillar, but then he talks about funding. And this opens up two other pillars, one of them being the pension. And we talked about SAS, and also joint ventures, which is pillar seven as well. I'm

Speaker 2 37:22
agreeing with you, Chris. But what about IP? Yeah, well, you know, the fact that he has book, the fact that he's teaching others how to do the same. So I think what Stuart's done is brought all the pillars into play, and tying them in a way that he wants to do that. So you can create a business by providing the books to trading, centrally creating his own IP. And that's great. And then moving on to being a receiver of inward investment. And I think if anyone is interested in property, this is very much a property pillar example for the most part where he's focused on which is, you know, the, the specifics of the market here, but see beyond the property, while it is property, fundamentally, I think the point he's making in this, and I think he reflected on a comment that he had from a mentor, which is no matter how successful you are, think about, you're going to run out of money at some point. And that's a very valid point. And I think I encapsulate that in the phrase that everybody runs out of money before they run out of ambition in the world of property. And the reason for that is, for the most part, you've got to leave money in. Having said that Stuart talked about different mortgage strategies, different funding strategies, where you can go in through one conduit, and you come out through another conduit. And that's creative finance. And I think we've got some creative financing, podcasts lined up for the future quiz, including some lessons we're teaching to our own internal members on creative finance. So there's just a plethora of really good information here. So you've got to not get overwhelmed by the breadth of this. But to try and pull it down to some single lessons that you can act upon yourself. And I know it's our job is to pull as many of them out because we just want to serve as that one piece of inspiration that one action you can take. So don't try and take too many. Just find one and definitely creating your own IP is a valuable one. But if you're at the beginning of your journey, chart your journey so you know you're going to build your IP, at some point. If you want inward investment, you're going to need to create that irresistible, compelling offer that he's clearly done. And we got positive podcasts and before Chris I talked about that. Maybe

Christian Rodwell 39:56
that's that's a good one for anyone who wants to become investable. You Yeah, yeah,

Speaker 2 40:00
maybe you could showcase that one? Because I think it depends. What's the transition you're in. And, um, which is going to be the most valuable lesson to pick up from this. And there's just lots of them. So I'm sure there's more to unpack even further, Chris. Yeah,

Christian Rodwell 40:17
absolutely. And the benefit, of course of using multiple pillars creating multiple streams of income is it gives you that security. And obviously, when you have the milestone of security locked in, then you can move on to independence and beyond that, as well. And we just love helping our members. That's, of course, as we come towards the end of another year, Kevin, we celebrate another group of members who have moved through those levels to reach security and 2024, for us, is really exciting one and we can't wait for hopefully some of our listeners right now to perhaps dip their toe in the water and work a little bit closer with us to

Speaker 2 40:52
work. Well, I hope so. And when you bogged down in the lessons we would give if I was sharing one of the fundamental lessons from all the podcasts we've ever done, for all the experts we've ever heard from, I would say it's about compounding actions, but you have to get started. So if you're on the fence, you can get splinters on your behind sitting on the fence for too long. If only you know, the market was better if only interest rates were better, if only don't wish things were better, wish you were better. And you can get better by getting started with one action. So even if the action is well, I'm not quite sure about my property strategy. You could look at your pension, couldn't you? You know, you heard Stuart talk about SAS, lots and lots of people have done a better job with their pensions. So they're turning their pension into a future source of empowerment, wealth comes from being empowered doesn't come from just slavishly following the market. So take a small action and what we encourage our members to do, and you could do it yourself if you're not really following us yet, in terms of getting help is one small action every month. Just one thing? Can you do one thing? And that's the skill, isn't it? What's the right thing. And that's where we come in. So we can help by looking at the right form of leverage looking at the right wealth dynamic, looking at the right combination of assets and say to you, if we were you, but one thing we'd have you do this month, and then you compound that one thing by doing another small thing the next month. And this solves the problem. The perennial problem of this quest, there's no lack of knowledge of sound like a soapbox, but I mean, there's no lack of knowledge here. There's a lack of ability to see that you only need when all this time pressure is on you. And Christmas is coming. And that's going to consume people as well. When time consumes you find space for one small action every month. And then you can do one thing, can you and if you can do one thing, you can do another thing. And then a compounding effect of the knowledge, the connections, the insights you get will compound them themselves. And for the most part, what do we think now? Most people can hit Security two to three years? Independence Party seven, you know, pretty much anybody? Why would you not do that? Why would you continue circling Irani have a routine of trading time for money, doing things for money, doing things for money, then doing things more for money, instead of owning things that generate money and I think that's the fundamental point that we suppose we all go on every day of our life, Chris to try and encourage parents, grandparents, individuals, business owners and employees to do something positive every month about building their wealth. Hey, I'm gonna get off my soapbox now and wish everybody unless this is one too early,

Christian Rodwell 43:59
a passion is coming through. That's that's for sure. So yeah, just make sure you know you're part of our community. However you wish to do that whether it's joining our free Facebook community, or just becoming a free member, head to wealth builders.co.uk forward slash membership. And don't forget as well if you'd like a copy of this book, drop us an email Hello at wealth builders.co.uk. And you could be one of those lucky winners. And if you have any other questions, if you want to get in touch with us, talk to us. You can send an email to Hello at wealth builders.co.uk or head to our website and you'll find the phone number. Give us a call. We're always available. So I think that wraps up today's episode and hope you enjoyed listening and Kevin, you and I will be back same time same place next week.

Unknown Speaker 44:41
We will indeed my friend and until then, so yeah.

Speaker 1 44:47
We hope you enjoyed today's episode. Don't forget that we are constantly updating our resources inside the wealth builders membership site to help you create, build and protect your wealth. Head over to wealth builders.co.uk slash membership right now for free access that's wealth builders.co.uk/membership

Episode summary

In this episode, we're joined by multi-award-winning Co-Living HMO developer, Stuart Scott.

Stuart takes us on a deep dive into the world of Co-Living HMOs, sharing his invaluable insights on how to supercharge your profits in the property market.

Stuart unpacks the concept of Co-Living HMOs and explains why this strategy can be a game-changer for property investors.

Tune in to discover how Co-Living HMOs can offer substantial financial rewards, including maximising rental income and boosting your investment portfolio.

Resources mentioned in this episode