Watch: Top 5 innovation strategies for HMO developers and designers

Stuart Scott (00:06.159)

So, guys. So, obviously I recognize a few faces in here. So, for the next 15 minutes, I’m gonna take you through some of the top innovation techniques that I’ve learned over the years. It’s a competitive market out there. And it doesn’t matter what level you’re at, whether you’re doing smaller HMOs, sewageneris, commercial conversions, you’ve gotta have the edge in the market. So, I’ve a few new techniques that I’m gonna be sharing with you today. So, as you mentioned, my background was I used to head up innovation teams. I built and sold two agencies. They were in Brighton and Hove. That’s the way I thought.

creating wealth was actually being the boss of the company. I then learned many years later, building up a portfolio was where you really created wealth. So I headed up the innovation teams. And as I mentioned, these are the brands that I used to work with. So I used to design products and experiences for these brands here. I basically do the same thing. I’m just doing it in real estate. I’m just working in a different kind of way. So my top tip number one is never stand still. Funny enough, I spoke to someone years ago where they bought a portfolio and they built it and…

They hadn’t done anything for years. because they stood still, they said they had occupancy issues. And that was because other people came into the market and they’d upped their game. So one of the core things to remember is in this industry, given that new people are coming in each year, you can’t stand still as part of what you’re doing. Now, you’ve probably, many of you have all looked at stuff like this through Google. You probably looked at these buildings here and look at all these terraced houses, ones with massive outriggers here, maybe some semi-commercial ones, shops with uppers.

Loads of opportunity. This is a HMO pin map. Now there’s a fair bit of competition in that area. You say that’s a fair bit of competition? That’s pretty densely, it’s reasonable. Does it just have interest? anyone, I’ll give you a guess. Well, I shall give you a clue. It’s on the South Coast. Does anyone take a guess of where that is? No, it’s not Brian. Yeah, it’s Portsmouth. Yeah, Portsmouth.

So that’s central Portsmouth. So there’s a lot of competition there. Now you can actually look at that two ways. It means there’s a lot of assets in Portsmouth that are big buildings that are big enough to get sui generis HMOs out of them. And yes, there’s a lot of competition there and spare room will probably kick off a lot of data that tells you that there’s a lot of competition there when you work out the demand versus the ads. However, most of it is substandard.

Stuart Scott (02:28.533)

So yes, it is a saturated market, but saturated with average stock that’s in the market.

What that really means is it doesn’t matter when you’re creating your portfolio, you’re always gonna have your competition. But one thing’s for sure, that competition is continually moving. You’ve probably noticed other people up in their game. People all the time are up in their game in the product they create. The other thing that we’re starting to notice is the customer expectation moving as well. So not only is your competition, and think about Portsmouth. Yes, there’s a lot of stock in Portsmouth, and a lot of it’s substandard. If you create amazing stock in Portsmouth, you’ll do really well.

But that is on the basis that the others do not up their game. They will eventually up their game. So your competition is moving and the customer expectation on what the customer is that has available to them to choose from is constantly changing.

So you can’t stand still, otherwise you’re going to start to be outpaced. When I spoke to people years ago, same thing they noticed, they got outpaced. None of us want to be outpaced in the market, okay? We’ve got hundreds of thousands of pounds invested into each property. So we can’t risk becoming a Blackberry. We all know what happened to Blackberry. They didn’t innovate, they didn’t change. Kodak invented the digital camera, hid it from everyone else because they thought it was going to protect the camera cells. Blockbuster didn’t change.

and they fell behind. So history is littered with companies that didn’t innovate. They stood still. They probably innovated when they started, but then they slowed down as part of what they were doing. So your main objective as a developer is to maintain that strategic edge in the market. We all have to do that. We have to remind ourselves every single year, we must maintain a strategic edge in the market.

Stuart Scott (04:21.13)

So the top tip number two is really look to identify those gaps in the market, those niches where you can operate rather than kind of fighting it out in the vanilla stock and the average stock. So this is an interesting analogy. you can shop in co-op or you can shop in Waitrose. You can buy a Ford Fiesta, you can buy a Range Rover. Every single market has premium and budget.

The really interesting thing about these markets is not the fact that there’s a budget and a premium, because we all know that in every market there’s budget and premium. What’s really interesting is that it’s functional or emotional. There’s a vanilla HMO. Do you get excited about living in it? No, it’s just ticking the box. It’s somewhere to live. Over here, this is where people want to live in your properties. So you’re moving away from a functional decision to an emotional decision.

We as developers, we want to be operating in the area where we’re in a niche where it’s emotional decisions.

So there’s some interesting data that came out really recently. I think it was about a year ago. So Paragon did a recent report and they found that almost half of landlords had seen an increase in demand for high-end HMOs. That’s a massive change in the last five years. That shows us that, I mean, I there’s many people in this room who’ve had stuff in magazines and stuff goes out there and it permeates outwards, but we forget that takes a while to permeate out.

This data is telling you that it is permeating out, that higher quality product is permeating out there. So 48 % have seen an increase in demand for high-end HMOs. Now, I’ve got a little bit more data from here. I just picked the main core stuff to pull out for you. So this was the other thing, tenant expectation. I totally understand that on suites for us as developers cost money. Okay, totally get that. But remember the customer doesn’t really care whether it costs money.

Stuart Scott (06:25.642)

the customer doesn’t really want to share a bathroom. Okay, so the data is now telling us that strategically, you don’t really want to have shared bathrooms. Okay, I certainly, well, actually from the stuff that we manage, because we manage all our stock in Brighton, Hove, Worthing, we don’t manage Eastbourne, but we manage our own stock in those ones. We know from being on the ground and managing it, that the ones with shared bathrooms take longer to rent, full stop. So on suite bathrooms, the data is telling us

The trend is moving that way, that’s important to the customer. High-speed broadband, I mean, again, that grading has changed. Now it’s business grade. We’ve moved all of our stuff away from standard residential to business grade broadband. We don’t have anything below about 400 500 megabits. I wouldn’t be surprised in the next five years. That would probably be a minimum gigabit connections in there. This is an interesting one because not a lot of us use this term quality furnishings, but I wanted to keep it true to what it said in the report.

What that basically means is that tenants value the interior design. They’re calling it quality furnishings. What they basically mean is the design. So every investment you guys make in creating that high quality product is now becoming very important from the customer perspective. And this one’s a controversial one, larger bedrooms. Now, your biggest room in your HMO, the one that breaks the rental ceiling, will almost certainly rent first. Always happens.

even if it’s breaking the rental ceiling. Interestingly, for about the last 10 years, I’ve made it my mission that every time I buy a property, I’m trying to make the rooms bigger. If you’ve got load of pokie rooms, I may not do the project. Because I want large rooms. Because when the market slows down and there’s a problem in the market, that will become a problem for you. So here’s a few images for you. This was from one of our projects down on the South Coast. It was from a commercial into Sewage and Air SHMO.

Okay, so we bought shops with uppers, we actually did prior approval and then we did full PD on it. Sorry, then we did a full planning app on it, okay? So our fallback position was PD, but we actually built out a full planning app on it. So it’s about 25 square meters of social space, multiple ovens in there. We basically created a very high quality, high end product. Here’s a few other shots. know, it’s little details here that again, don’t, not in the smaller ones, you wouldn’t put like ladders in, okay? Because with a, you you try getting your shopping.

Stuart Scott (08:52.467)

in a wall unit. I mean, Christ, we struggle to get it in our own kitchen, let alone one wall unit. So putting in additional storage in really helps as part of it. This is another project that we had that’s down in West Sussex. Again, so we’ve got a mix of stuff, which is commercial conversion, all the way through into kind of these ones here. I think this one is a six bed. And then this one that’s made up of multiple blocks. But you can see from the photos, what we’ve really focused on is a lot of bespoke work that’s in there.

Okay, so we’ve made that high quality product because we know when we put this on the market, it is the best product that’s on the market. That is how we’re able to charge the highest rents in the market. I mean, it’s crazy. Some of the rents now are heading up over a thousand pounds, which is crazy level of rent. Now you might think that’s a lot of money, but bear in mind, if you’re doing a one bed flat with all the bills, it’s significantly more. So the product we create reflects the fact that we want to make sure we’ve got a superior product that’s in market.

This was another project, a good central location project. Again, sometimes we do breakfast bars, sometimes we don’t, sometimes we build them in. I do have a little bit of, I think on my last talk last year or the year before, I had a bit of a bugbear with a thing called perching benches. You know the ones against the wall? You know the ones, these ones I think I was talking about? I hate them, they’re awful. They don’t work. I don’t know why people keep putting them in. So anyway, the rooms we create are usually about, we don’t have anything below about 10 square meters now.

So it’s about 10 to 20 square meters in the rooms. And even the smaller ones here, the compact ones, they tend to go down to about say nine to 10 square meters. So some of the data that we have is we generally find that about from our co-living HMOs compared to the data of competitor vanilla, we are outperforming them by 20 to 30%. And that’s consistent. Even the people that I train get the same result, usually come at 27, 28%. So that’s meaning that a high-end product is outperforming the vanilla by

20 to 30%, okay, so there’s a knock-on effect there. Now, yes, that’s great for cashflow, but just imagine you were doing a sewer generis, and actually your valuation was based on a multiplier of the income. That 20 to 30 % is gonna make a massive difference there as well. So really the strategy is about maximizing that profit margin. You know, we’ve been through COVID and we’ve been through, for example, the cost of living crisis, we’re going to high interest rates. This margin is your buffer. As a developer,

Stuart Scott (11:20.558)

I would sometimes get asked, would I ever do a vanilla? I would never risk doing a vanilla. I wouldn’t want to risk. I need to have that margin there. I need to have the superior products in market for the demand. And I want to be pretty damn sure that I’m going to have that margin so that if interest rates do go up, I can weather those. OK? Am I making less money? Yeah, I’m making less money. We can’t really complain if we’re making less money on a HMO because at end of the day, when the interest rates come down, which we know they’re going to eventually come down, we’re to be making more profit.

So the third way is diversification. Now I know we’re here in a HMO event, but it is important for us as developers to diversify. We’ve all heard the term, don’t put all your eggs in one basket, okay? Now, although I’m known for co-living HMOs, I do have many other strategies that I do as well. Okay, as a developer, I find buildings, I convert the buildings, whether they’re commercial buildings, whether they’re resi buildings, doesn’t really matter. And ideally, yes, the output would be a co-living HMO. If it’s not,

then I’ll find something creative for the building as a developer. So one of the ways you can diversify is through location. So for example, I live in Brighton and Hove, fantastic capital appreciation. Okay, that’s great. But your cashflow is gonna be lower. You go to cheaper areas, okay? You’re not gonna have the same capital appreciation, but your cashflow will be higher. Now would I want all of my stuff in central Brighton and Hove? Absolutely not, because I’d run out of money pretty damn quickly because the assets are so expensive.

But would I want them all in a cheaper area? Well, no, because now I’ve lost those lovely lump sums of cash that I get every five years out of my main because they’re rocketing up in value. I like the blending. So I recommend, well, when I’m working with people, I always recommend that, know, balance that out, that diversification of locations out. The other thing that you can consider as well is diversifying the scale of what you’re doing with HMOs, okay? So the five, six bettors over here. Many of us have all got the five, six bettors, okay?

great thing about these buildings is they can go back to being family homes. 10 years, 20 years, great locations. Yes, I know you’ve put en suites on the ground floor and that’s not what people want. You’d strip them out. Okay? If the building’s doubled in value, you’re really not going to mind stripping out the en suites on the ground floor. So they can go back. There’s mini exits on them. I wouldn’t want my portfolio to all be there, but equally, you’re sui generis, you’re larger ones. I wouldn’t want all sui generis.

Stuart Scott (13:46.249)

Because then the only person I’ll ever sell to is investors. Okay, so I like mixing sui generis and I like mixing the smaller six-bedders as well. I like having that balance in the portfolio. The other thing that I do with my portfolio is I diversify the types of stuff that’s in it. So for example, I’ve got my bitalettes. I didn’t sell all my bitalettes. In fact, when I’m mentoring people, I don’t say to them, off the bitalettes. Some of them might be in

cracking locations that will double in value in 15 years. So I keep the bitenettes, I’ve still got them, you you’re not gonna have to retire on them. But then I’ve got my HMOs. That’s the kind of mainstay of my portfolio. I’ve got the HMOs, which as you know, are blended between the six-bedders and the pseudo-generous ones, okay? So I’m blending those buildings that are there. And then the third part is I have commercial. This is where I bought shops with up-pers, mixed use, larger sites. I carved up the site, I created part of it into

co-living HMOs, maybe into apartments, and then I kept one part as commercial, usually to keep the council happy, because they want at least one part facing the high street that is commercial. So I have commercial units here as well. Okay, so that’s part of the portfolio. Okay, great thing about those is they pay and obviously you do a 10 year lease on it. Fantastic, you never hear from them. Okay, and then these, this here is hospitality. So back in 2017, I started buying hotels.

Now I learned very quickly that I needed some diversification in there and I could see that the SA service combination industry was built on rocky foundations, should I say? It was unregulated, come on, we all knew that this was gonna happen, we knew regulation was gonna come in on it. And so I really wanted to understand how to operate and own C1 hotels, which meant that back in 2017 I had to become a hotelier. So some of my diversification is building up my track record with the high street banks.

So that if I ever want to get finance on hotels, it’s easy for me to get it. But I had to build that up and build that track record. The other thing that you can consider, and I know that some of you in the room are probably already doing some short stay. We all love the fact that long-term, great, HMOs, people are in there for years. Fantastic. Short stay, great returns. Everyone loves the returns in short stay. What happened during COVID? The short stay? Went off a cliff.

Stuart Scott (16:14.716)

So short stay is fantastic, great returns, but remember with short stay, sell, sell, sell, sell, sell. You’re constantly selling. If a hotel has a couple of rooms at the end of the day that they don’t rent out, that’s lost forever. It’s perishable stock, okay? So you have to sell every single day, but short stay provides some diversification. So this was one of our first apart hotels.

where we have blocks of studios, okay? We owned this, we operated it, we funded it with none of our own money. We financed it, we’ve refinanced it, and we’ve got all of our own money out. So first, our part hotel, free of charge now. All money’s out, okay? Now that is not quick strategy. You’re not gonna be refinancing within four years, okay? So I know there’s people who think you can, and maybe you can, but it’s not on the right kind of product that you should be on.

So these are some of our apart hotel suites that we’ve got. Some of them sleep two, threes, fours, fives, and six people. Okay, so we’ve got blending between it, okay? And we’ve got multiple sites and we’ve got a third apart hotel site that’s just been secured as well. One of the other things to consider is constant learning. Now we as developers, we need to continually up our game. And interestingly, although we’re here talking about products, the actual area that we need to continually upgrade ourselves on is being a better developer, okay?

Product is one part of it. So I created this little diagram because I thought this works quite well. The most important thing is you have to remember that you are primarily a developer. That means that you guys are going to go out there, you’re going to find the sites, you’re going to stack the sites, you’re going to analyze the sites, you’re going to know how to add value to the sites, whether that’s resi sites, commercial sites, mixed use sites, high street sites. You spot things other people don’t. You know how to add value.

You know the maths that other people don’t. You have a toolkit of techniques that other people do not have. That’s you as a developer. And then, once you’ve refined those skills, you get really good at creating a product. Now that might be a high-end service accommodation. It could be a high-end biotech, a high-end HMO. They’re products. We push out products. But primarily, you are a developer.

Stuart Scott (18:37.211)

And we’re always looking to improve that toolkit. I started in Brighton and Hove. Really, really, really difficult area to make it work. In fact, everyone told me it’s never gonna work there. And I had to get very, very good at my toolkit. I had to find techniques and ways to add value in a highly competitive, high capital appreciation area where the assets are expensive. I had to, I had no choice. It’s either that or I go to a cheaper location.

So I had to learn how to improve that toolkit. So the takeaway is for us as developers, make sure that you continually invest in improving that toolkit of skills, because you’re gonna be buying buildings for the next 20, 30 years and permitted development is gonna change, prior approval is gonna change. They were already talking about new PD rights so that you could have unlimited quantity on the roofs and more extension space. know, all the stuff they’re talking about with PD.

You’ve got to be on the front edge of understanding this PD because that’s where you can mitigate your risk as a developer. The fifth way is to try new things. Now you guys have probably heard of the 80-20 rule. So my advice when you’re doing your next project is this white area here, that’s the 80%, okay? What you did on your last project, just lift all the good stuff, okay? Just lift all the good stuff you did from the last one. The pink bit.

is 20%, that’s the new stuff, okay? That stuff you have not done before, okay? You’ve been thinking about doing it, it’s a little bit risky, not sure if you’re gonna do it or not. You have to be pushing, you have to have the 20%, okay? What’s the worst that’s gonna happen?

What’s the worst that can happen? You might have to change a few things. So details matter. The small little details matter when you are working on your projects. If you find yourself obsessing, and those of you that are into design in this room will know that people might think it’s strange that you’re obsessing over a small socket when there’s hundreds of thousands of pounds being spent. The details really do matter. The small stuff really does matter. You can obsess over it. So obsess over the small details.

Stuart Scott (20:53.668)

Now in a competitive market, one of the biggest problems is that average is not good enough.

In fact, I go a step further, it’s a risk. Being average and creating an average product or just doing what you thought was enough is a risk in the market because you’ve got competition in the market. So on your next project that you have, there’s gonna be a bar, okay? You guys set the bar, market doesn’t set it, you guys do. You know what you’re gonna do on your next project. You’ve got an idea of what you’re gonna do, okay? There’s a lot of creative people in the room, a lot of people I’ve seen on social media that push stuff out, okay? You’ve got a bar.

you set the bar personally for yourselves, my advice on your next project is raise that bar, okay? You have to raise the bar. This is not just about money. You’ve got to be pushing yourself, okay? You’ve got to be passionate about pushing that and raising that bar because remember, the competition will continually raise their bar. If you raise the bar on every project you do, yes, people are copying you on social media.

Yes, they’re downloading your stuff and they’re trying to do carbon copies. All those things will happen. But does it matter? Does it really matter if you’re doing that? Because you’re going to be ahead of all of them. The real issue here is making sure that you’re pushing ahead. It doesn’t matter in Portsmouth. A lot of competition in Portsmouth. If you keep innovating, if you keep pushing forward, you are still going to be ahead of the competition. So you have to be willing to push the boundaries there.

Firstly, we covered it’s really important never to stand still. You’ve got to be pushing forward as a developer. Okay, you cannot stand still. You’ve got to innovate continuously. Identify those gaps in the market that we talked about. Okay, so identify the gaps in the market. They’re niches that we operate, whether that’s commercial to resi, whether that’s high-end, whether that’s niches within there. Think about diversifying your portfolio. If you’re too heavy in one, think about diversifying out as part of that.

Stuart Scott (22:53.017)

Like I say, and also think about the contracts, okay? When you’ve got the commercial contracts, whether you’ve got the short stay, whether you’ve got, for example, the HMOs, different niches within HMOs. Really important one, make sure you are investing time and money in improving your developer toolkit, okay? Because that will pay dividends in you finding new leads, assessing them, stacking them. Every year, you’re gonna be finding new exciting leads and you wanna be able to…

Be able to do things other people can’t do. Convert buildings. I why is it that we spot a building and then we work out that we can, so I might look at a building and I work out, right, I can get a nine med HMO at that. Okay, everyone else has looked at it and thought they could get a seven or an eight, so the numbers don’t work. The difference is your toolkit of skills allow you to be able to know how to de-risk the purchase. And if you know how to use the skills to de-risk the purchase, you can take risks on planning.

Okay? And that’s how you’re able to get even more planning up with this part of what you’re doing. So always look to improve that developer toolkit and become a better developer. Because remember, outputting those products, you can push out high quality products. You can continually up your game with those, but the skills on the front end are really important. And finally, raise the bar. Make sure that when you guys are out there on your next project, whatever project, I’m sure there’s many that are in the progress of doing at the moment, just raise that bar a little bit, okay?

Think of the 80-20, okay? Whatever bar you set yourself, just raise that up a little bit. So I’ve actually written a book called, show of who’s read the book? Okay, so this is a full-color book that I wrote. It’s got all the floor plans, schematics, various, I’ve got information on commercial to resi, the strategy area research, everything else, and the design stuff, of course, is all in there. If you go to my website, the Colin Revolution, so if you Google the Colin Revolution or Stuart Scott,

you go to my website, the digital PDF of that book is now free of charge. Okay, it’s only happened since about two weeks ago. So you can go to it either on my website, so Colibre Revolution, and you can download it for free. Okay, so that’s absolutely free. So that’s my company, Colibre Revolution. Hopefully you guys have found that inspiring. Have I got time for some questions? We’re good? Cool, okay. Does anyone want to dive in some questions?

Stuart Scott (25:18.69)

Anyone, any questions on commercials, anything, Mark here, sewagenerous valuations?

Stuart Scott (25:43.032)

more like essays or quick, you know, is it a bigger team involved to… What, to do sui generis? Or is it a bigger team to do sui generis or…?

Oh, what? As opposed to? SA sort of style, mean, partners. Oh, yeah. How does it compare? Okay, right. The hotels are hard work. Okay. So the co-living HMOs are pretty straightforward. We’ve systemized them. You can either go and get them managed or you can bring in the management in-house yourself. I chose to do it in-house and I have agents that manage some of it. The difference with the hotels is the hotels are a fast moving business. Okay. There’s more throughput.

know, glums on seats. Think how many people you stay at a hotel, stuff’s happening all the time. Okay. People go in, if there’s hundreds of rooms, people go in all through the time. So there’s a lot more systemization that has to happen for a hotel to be systemized. So I don’t really have any general service accommodation. I did years ago, I had stuff in central Brighton and it was a nightmare because all the net, put it this way, if you’ve got a service accommodation flat, I guarantee you in a block of flats, I guarantee you every other person.

that lives in those block of flats and knows you’re running it. And they would be pitchforks of dawn to get you out of there. So I realized early on that doing SA in flats mixed in with resi was always going to be destined to be a loophole that was closed because it makes no sense. So is it more work? Apart hotels are more work because you’re having, we think about how many people going in and going out. Okay, there’s a churn.

people going in and out, there’s a lot more mechanics to doing it. It means that, can you systemize it so that you’re not actually having to do that much? Yes. But it took me a lot more work. So if you, the entry point is more complex, but it can be systemized.

Stuart Scott (27:45.603)

Yeah, so the question is about whether a factor in the costs on a part hotel versus a HMO. So the big difference with a part hotels is, think of it, okay, remember I mentioned about being a developer. Okay, forget about the end product, yeah. One is buying C3 residential, turning it to C4 HMO, okay? And we all know that you could do a six bed HMO, yeah? Many of you probably got six beds. Or if you’ve got seven, eight, nine, 10 rooms, that’s sui generis, okay? But with hotels, that’s C1.

the use class is different. So if you forget about the end customer, as a developer, you’re either buying and operating C1 or commercial and converting it into C4 or Sui generis, or you’re buying, you might be operating SA, but remember that that loophole is about to be closed by the government, or you’re operating like I do C1 buildings. Now C1 buildings are, the funding is different, the compliance is different, the banks are different.

it’s just a completely different use class. So that’s why it’s sometimes good to think as a developer because imagine you see a building, which is commercial, okay, and it’s pure commercial, but you know it’s a really great part. You want to know that you’ve got skills to be able to look at that building and go, do know what, I know it’s commercial, but I know how to deal with it. I know what prior approvals I can do. I know I can work with class C. I know what I could use with class MA, class G, all the different ways that you can convert the building. You know how to do that. The thing with the part it tells is it’s different use class.

you’re learning a completely different use class, which is called C1. And so with C1, most important thing is understanding that there is different lenders, different criteria, and different ways to work with them. So it’s completely different use class. So they can still be systemized. It’s just got to remember as a developer, you’ve got to think of it as the use class. Yeah, at the back of it.

Stuart Scott (29:42.942)

to development.

Stuart Scott (29:56.385)

special to see.

Stuart Scott (30:04.098)

What was the best resource to try and understand these nuclear missiles, I mean the rights of the air rights, you know that?

So in case anyone can’t hear that, the question was about where obviously getting the information on PD and the latest PD stuff that’s going out. I think you’ve the wrong architect, if I’m honest. I think you’ve got the wrong architect there because really every architect should be, well actually no, there’s two parts to this, okay? Part one sounds like you’ve got the wrong architect because most architects will know about them. But remember your architect very rarely is a property developer, okay? Okay.

But that means that they do know about most of the class MAs, class Gs and the stuff that you can do. But what they’re not thinking, okay, they are aware of some of new changes coming in, but remember they’re not thinking like a developer. We use those combinations strategically because we’re doing the maths and the numbers on stacking the deals. They’re converting the buildings. They’re not doing the maths on the deals. So I think that there is a responsibility from us to be aware of the, should we call it the more strategic stuff that’s happening with Ruby.

as a developer through networks like we have, you know, whether that’s PIM, Progressive, all the different ways you could network with other developers to hear about stuff that’s on the horizon. And then the actual architects you’re working with, you need to know that you’re with the right kind of architect that works with HMO developers and they have worked on commercial conversions and they understand utilizing Class G, Class OMA and all the other stuff. Sounds like normally when I’m working with people and they’re trying to find an architect, I usually say, to the…

planning portal, you can do this on some various bits of software and work out all the successful architects that have been behind the planning applications and all the sewer generics and come to reses, commercial to reses that are in that area. And then you’ll get your contact of your shortlist of all the ones that have successfully worked on those projects. There was a question here and then I’ll go across.

Stuart Scott (32:00.758)

Da da da, segue then. My question was, the hurt cell, the hurt cell’s… that’s cool. Okay.

Well, my hotels are JVs. So I would actually say that my day-to-day revenue is probably coming mainly from my HMO and mixed portfolio. And the hotels, don’t really take it. They’re like a bank. I don’t live on the income from them. I let it grow. I let it build up. And then we’ve worked out all our investors. So then I own the assets outright. So yes, I will be drawing a wage for them at some point, but I don’t need to at the moment.

I would say that the stuff that I see that pays the bills and comes into me is mainly from my main portfolio and the part I tell staff is high performing, but I reinvest it to pay the debt down, which is a bit boring really, but you know, I want to get the debt down.

Stuart Scott (33:05.687)

Yeah.

Stuart Scott (33:31.17)

depending on what areas. So question was about whether you’re raising the bar, whether it’s cheaper areas, more expensive areas.

Yeah.

Stuart Scott (33:44.673)

Well, it’s never affected me and Brian and Ovan. That’s a market. I know I’ve got the most secure product that’s on market. So that’s never been an issue. Most important thing to remember is that these are assets, okay? You’re developers. These are assets, okay? The only reason we got into this is because we knew, I know that many of you are looking to pivot away from different, your full-time jobs. Maybe with your own property or not full-time. But at end of the day, they are a revenue for us. That’s why we kind of wanted to replace our income. That’s why we did it. And HMOs are a fantastic way to do that.

every single market is to be completely different. And so, for example, Brighton and Hove, I knew that if I was doing something in Brighton and Hove, and you’ve actually been in some of my hedge mows actually, I knew that they had to operate at a certain level. I couldn’t take a risk. doesn’t matter. And funny enough, even if I do stuff that is in a much cheaper area, I will still create the best product in the area. But the things that you may not see from the photos is that the finishes are actually cheaper.

the design layers and techniques are cheaper. So it is proportional. like in a cheaper area, I wouldn’t do something in a cheaper area that I do in central Brighton Hove, okay? Because I haven’t got the asset value to back up the refurb. So I’d have to be proportional to that. But absolutely, yeah. Ensuring I’ve got that high quality product in the market. So the data, do you remember the Paragon data? Well, that, mean, that straight away shows the market shifting. I mean, it’s pretty glacial speeds. Because we’re talking about this and how long has…

Co-living been pushed out there. What are we talking about? don’t know. 10, 12 years? I don’t know how long it’s been now. But it’s very glacial speeds. So that market is moving and somewhere like Portsmouth, you’re always going to have that competition in Portsmouth. I think you… And an interesting sub-question from that is how often do have to redo them? Because when you talk about up in your game, do I continually up the game on the existing stock? Well, actually, I go back every five years and the first thing I do is I go in there…

and I work out if they’ve moved anything. That’s the first thing, have they moved anything? Because from a usability perspective, if everybody’s moving and they’re putting the TVs over here, or for example in the social space, they’ve gone and taken the dining table and they’ve dragged it over to this side over here because they couldn’t see the TV from over there. So I do go back and have a look if there’s usability things based on going around and seeing if they’ve either requested something or something’s happened in there. But generally speaking, mean, a lot of stuff is quite heavy duty.

Stuart Scott (36:11.713)

A lot of the industrial stuff is going to have a hard push to break some of that stuff. So I have to go back in every five years and go and double check stuff and maybe repaint. But yes, in any market, that raising of the bar, remember it’s only 20%. It’s not a huge amount. It’s just, you you’ve got your stock, you’ve got every time you’re doing something, you’re just moving forward. The worst thing you can do is stand still. You you’ve got to be continually raising that bar. But the degree to which you raise that bar, that’s up to you.

It can just be the 20%. It doesn’t have to be that you’ve got to innovate. There isn’t a responsibility to create something nobody else has done because we all know from Pinterest that probably someone else has done something you’ve already done. You probably didn’t invent what you thought you invented. It’s probably already out there. The most important thing is you’ve just created something which is fantastic. Your customers are giving you feedback. That’s the best stage they’ve lived in. You know you’re doing your job right at that point. So whether you’re a student or professional, that’s important.

Okay, one last question. Okay, one last question.

Stuart Scott (37:20.001)

Oh, okay, I’ve got question for everyone else. Interest rates, okay? Does anyone need interest rates, eh? What does everybody think? How long before interest rates come down? End of the year? Oh, August, even sooner. And the summer? Yeah. Okay. What does everyone think is going to happen once those interest rates come down? What’s everyone think is going to happen to the market?

Yeah, yeah. yeah, they’ll flood in, they’ll flood in, but the confidence will come back. Guys, if you want to go out there negotiating some deals, just please do use this time now, okay? Because we’ve got, yeah, we’ve got a six month, maybe if it takes longer, six to 12 months, use this time wisely, guys. Okay, if you’re to put some cheeky offers out there, do make sure you use this opportunity now to put those cheeky offers on the table. I’m working with enough people that are getting stuff.

accepted at the moment and it’s significantly lower than it would have been. In a year’s time, you know, it’s gonna be more bullish and it’s gonna go back into being more of a seller’s market, okay? So just use your time wisely. Anyway guys, I’m over time, so I hope you found that inspiring. Thank you much guys.