0:00:02 > 0:00:05From cottages to flats, they're available at auction.
0:00:05 > 0:00:09First-time buyer or buy-to-let investor,
0:00:09 > 0:00:12there might be the property you want under the hammer.
0:00:38 > 0:00:43At auction, when the hammer goes down you HAVE exchanged contracts.
0:00:43 > 0:00:48There's no chains. You bid. You buy. It's easy to get carried away.
0:00:48 > 0:00:51How did our purchasers today get on?
0:00:52 > 0:00:57'In Wales, you can view this auction opportunity in a variety of ways.'
0:00:57 > 0:01:01There are some strange angles going on there.
0:01:02 > 0:01:08'I'm concerned about what's hiding in the woodwork in north London.'
0:01:09 > 0:01:11Buyer beware.
0:01:12 > 0:01:17'And things don't look that good at this semi in Wigan.'
0:01:17 > 0:01:22There is a very nasty crack in that corner there.
0:01:24 > 0:01:27'All have been sold at auction.
0:01:27 > 0:01:32'We'll find out who bought them when they went under the hammer.'
0:01:38 > 0:01:42This is Caerau, a village in south Wales.
0:01:42 > 0:01:46Up for auction was a three-bedroom mid-terrace. This is it.
0:01:46 > 0:01:50Guess the guide price. It was 39,000 quid.
0:01:50 > 0:01:55Outside, it looks in pretty good order, with double-glazed windows.
0:01:55 > 0:01:59So, for 39 grand, there must be a catch.
0:02:02 > 0:02:06You can't expect much for that kind of money. Or can you?
0:02:06 > 0:02:11I like these tiles. I think they're original, judging by this door.
0:02:11 > 0:02:15It has this sun pattern thing going on. Very cute.
0:02:15 > 0:02:17But, um...
0:02:19 > 0:02:23There are some very strange angles going on there.
0:02:23 > 0:02:25That could be very serious.
0:02:25 > 0:02:31Into the front room. Nice size. Nice to see the open fire.
0:02:31 > 0:02:35Lots of light. Doesn't feel dark and dingy.
0:02:35 > 0:02:39The rear sitting room through these sliding doors.
0:02:39 > 0:02:41Good size space.
0:02:41 > 0:02:44A few indications of damp need investigating.
0:02:44 > 0:02:48But we like it. Lots of light. Into the kitchen.
0:02:48 > 0:02:52It's a good size, but all the units need replacing.
0:02:52 > 0:02:56I'd want to rethink the layout to bring the cooker closer
0:02:56 > 0:02:59to the work surfaces.
0:02:59 > 0:03:03Beyond the kitchen there is a toilet and bathroom.
0:03:03 > 0:03:07It's not unusual for the bathroom to be on the ground floor,
0:03:07 > 0:03:12but it's strange to walk through the bathroom to get to the toilet.
0:03:12 > 0:03:16I'd consider linking them together at the very least.
0:03:16 > 0:03:20# I think I'm gonna need some therapy... #
0:03:21 > 0:03:24But there's another option.
0:03:24 > 0:03:26In the garden, you can see
0:03:26 > 0:03:31that the back is not in nearly as good condition as the front.
0:03:31 > 0:03:34Neighbours have added an extension.
0:03:34 > 0:03:40Maybe there's a chance to relocate that bathroom and create a bedroom.
0:03:40 > 0:03:43Time to explore the rest of the house.
0:03:50 > 0:03:54Upstairs, it really does feel quite peculiar.
0:03:54 > 0:03:58Strange angles. The floor's all over the place.
0:03:58 > 0:04:03It's like one of those fairground rides where the floor wobbles.
0:04:06 > 0:04:11But you have three reasonably sized rooms here so it's not all bad news.
0:04:11 > 0:04:17And having that bathroom downstairs is not the end of the world.
0:04:17 > 0:04:20A much bigger problem is this.
0:04:20 > 0:04:24A crack that's so big I can put my hand in there.
0:04:24 > 0:04:28That indicates to me that any subsidence this house has,
0:04:28 > 0:04:33has had, is actually, I think, still happening.
0:04:35 > 0:04:39I'd definitely recommend seeking professional help.
0:04:39 > 0:04:42If there is ongoing subsidence,
0:04:42 > 0:04:45you'd need to spend a serious amount.
0:04:45 > 0:04:49Even at that low £39,000 guide price,
0:04:49 > 0:04:51it might not be worthwhile.
0:04:51 > 0:04:56Let's find out what a local estate agent makes of the property.
0:04:56 > 0:05:00'The layout is fairly typical in a cottage such as this.
0:05:00 > 0:05:03'It has been let go somewhat.
0:05:03 > 0:05:06'I can sense some subsidence, which is not unusual'
0:05:06 > 0:05:11for the type of property, however I recommend a full structural survey.
0:05:11 > 0:05:13'It may be worth extending.
0:05:13 > 0:05:20- 'Certainly, I'd consider bringing the bathroom to the first floor. - How much could that cost?
0:05:20 > 0:05:26'To renovate the property I would put a figure of £25,000 on the work.
0:05:26 > 0:05:29'To do a double-height extension,'
0:05:29 > 0:05:32we need to add about 15,000 onto that figure.
0:05:32 > 0:05:37'If you pick this up at the £39,000 guide price,
0:05:37 > 0:05:43'you'd be looking at an outlay of 65,000 to 80,000.
0:05:43 > 0:05:46'What sort of return could you get?'
0:05:48 > 0:05:53In the current market, in the region of 70 to 75,000.
0:05:53 > 0:05:58Extended to double-height, with a bathroom on the first floor,
0:05:58 > 0:06:03I'd hope to achieve 85,000 to £90,000.
0:06:03 > 0:06:09'If your plan was to re-sell, there'd be no advantage in extending.
0:06:09 > 0:06:17'With rental values of £400 a month, it might make sense to hold on to it until the market improves.'
0:06:17 > 0:06:21# ..Welcome to the house of fun Now I've come of age... #
0:06:21 > 0:06:25The property may be a bit like a fairground funhouse,
0:06:25 > 0:06:32but did the person who bought it set themselves up for a rough ride? Let's go to the auction.
0:06:36 > 0:06:40Lot number 29, the three-bedroom mid-terrace house.
0:06:40 > 0:06:43Gatley Street, Caerau.
0:06:43 > 0:06:48Can I say 45 for it? 40, to get on. It's worth more than that, surely.
0:06:48 > 0:06:51Surely 40 to start me.
0:06:51 > 0:06:5538, then? 38, I'm bid. Thank you. 38,000.
0:06:55 > 0:06:59It is yours at 38. 38,000. Your bid at 38 now.
0:06:59 > 0:07:0240, now? All right, nine then.
0:07:02 > 0:07:0439,000. 40, can I?
0:07:04 > 0:07:08At 39,000. 40 I'm bid. Thank you, at 40,000.
0:07:08 > 0:07:12The hammer's up at 40,000. And one, will you?
0:07:12 > 0:07:15At £40,000, it's your bid, sir. Are you all done?
0:07:15 > 0:07:18At £40,000. Can I see another one?
0:07:18 > 0:07:22One down here, thank you. At 41.
0:07:22 > 0:07:26This is no money for it. You're out. I thought you'd get it. 42.
0:07:26 > 0:07:31Three, in front of me. 43 in the front. You're out behind.
0:07:31 > 0:07:3443 in the front row. I'm selling to him, make no mistake.
0:07:34 > 0:07:41You'll go home and realise what a bargain you've missed. £43,000. Shout if I'm missing you.
0:07:41 > 0:07:44There is the bid, in the front.
0:07:44 > 0:07:47At £43,000, I'm going to sell it to him.
0:07:47 > 0:07:52You're both out behind. At £43,000, have you all done?
0:07:52 > 0:07:54At £43,000...
0:07:54 > 0:07:57It's yours, sir. Thank you.
0:07:57 > 0:08:01'The winning bid of £43,000 came from Mark.
0:08:01 > 0:08:05'This is his first development project, and it's a big one.
0:08:05 > 0:08:08'I met up with him
0:08:08 > 0:08:12'to find out whether he knew what he was letting himself in for.'
0:08:12 > 0:08:14Mark, good to meet you.
0:08:14 > 0:08:19- Congratulations! Why do you want to buy this house?- Er...
0:08:19 > 0:08:23It's just a first property venture.
0:08:23 > 0:08:29Just fancied buying it. I looked at the area, found houses selling 75,000 to 100,000.
0:08:29 > 0:08:36Found this one for around 40 and thought what could be wrong? Outside, it looked in good shape.
0:08:36 > 0:08:39- Right.- Thought it's going to be a good venture.
0:08:39 > 0:08:43- Did you look inside before you bought it?- No.
0:08:43 > 0:08:48- Why?- I didn't actually get a chance. I had a look through the letter box.
0:08:48 > 0:08:53I thought, "It can't be too bad." Outside looked pretty good.
0:08:53 > 0:08:57- What did you think when you saw inside?- I felt sick.
0:08:57 > 0:09:00I thought a quick paint and rent it straight out.
0:09:00 > 0:09:03DESPONDENT: But, no. Don't think so.
0:09:03 > 0:09:07- The next time you buy one...- Yeah. MARTIN CHUCKLES
0:09:07 > 0:09:09I'll be viewing it, don't worry.
0:09:09 > 0:09:16'It's a bit late now, but I think Mark has learned a valuable lesson.
0:09:16 > 0:09:21'Don't be fooled by low guide prices. They're set for a reason.
0:09:21 > 0:09:26'If something seems too good to be true, it probably is.
0:09:26 > 0:09:31'But all is not lost. With a bit of know-how and some useful contacts,
0:09:31 > 0:09:35'Mark could still turn this project around.'
0:09:35 > 0:09:39- What do you do at the moment? - I own a couple of businesses.
0:09:39 > 0:09:42My main business is gaming machines, fruit machines.
0:09:42 > 0:09:45Supplying local pubs and takeaways.
0:09:45 > 0:09:49I've just sold my chip shops and sandwich bar,
0:09:49 > 0:09:54which is where I've got the money from to buy properties.
0:09:54 > 0:10:00- In property renovation, what experience have you got? - Er... Not much! Not a lot!
0:10:00 > 0:10:05- Loving your honesty! - I've got a few phone numbers.
0:10:05 > 0:10:09'Blimey! This is a bit of a gamble for Mark.
0:10:09 > 0:10:14'I hope he's hitting the jackpot on those fruit machines.
0:10:14 > 0:10:18'He'll be pushing it to come up trumps on this place.'
0:10:18 > 0:10:23What are you going to do and who's going to do the work?
0:10:23 > 0:10:28I've got builders coming in tomorrow to give me some quotes.
0:10:28 > 0:10:32I'll strip all the walls back, bond and replaster.
0:10:32 > 0:10:36New ceilings, level out the floors downstairs and upstairs.
0:10:36 > 0:10:39New kitchen, new bathroom.
0:10:39 > 0:10:45Restructure the bathroom. Just a couple of things(!)
0:10:45 > 0:10:50Presumably, your budget has been "slightly" extended.
0:10:50 > 0:10:53From a tin of paint to about 15 grand.
0:10:53 > 0:10:56- Right. - Hopefully, 15 grand will do it.
0:10:56 > 0:10:59# ..I'm gonna gamble everything I've got... #
0:10:59 > 0:11:05'£15,000 is a tight budget and if there is subsidence, it won't be enough.'
0:11:05 > 0:11:07I'm praying it's not too serious.
0:11:07 > 0:11:13If it is subsidence, I've got a big problem. Back to auction it goes!
0:11:13 > 0:11:18- Would you consider that option? - Yeah, if there's too much work.
0:11:18 > 0:11:22So what's the cut-off point in your mind?
0:11:22 > 0:11:29Well, if they come back to me with a quote of £25,000, I can't see it being viable.
0:11:29 > 0:11:34- The quotes from these builders are pretty important.- Pretty much, yeah.
0:11:34 > 0:11:38Is the idea to rent this out or sell it?
0:11:38 > 0:11:41Rental. I'm going to get a portfolio of rentals.
0:11:41 > 0:11:46- Get as many as I can.- How many would you like?- Between 20 and 30.
0:11:46 > 0:11:49# ..Viva Las Vegas! #
0:11:49 > 0:11:51'Mark certainly has big ambitions.
0:11:51 > 0:11:59'If he's going to get that many properties, he'll have to curb those gambling instincts.'
0:11:59 > 0:12:03Mark thought he'd hit the jackpot with his first auction.
0:12:03 > 0:12:10He made that classic mistake of not visiting the property and it's a lot more work than he'd anticipated.
0:12:10 > 0:12:14You could say he's found himself a bit snookered.
0:12:14 > 0:12:17Find out how he gets on later in the show.
0:12:20 > 0:12:25'I'm off to northeast London in search of a property bargain.
0:12:25 > 0:12:29'I think this is an area with great potential.'
0:12:29 > 0:12:33Whilst being 20 minutes by train to Liverpool Street,
0:12:33 > 0:12:35the heart of the city,
0:12:35 > 0:12:39Edmonton has had an image problem in the past.
0:12:39 > 0:12:45However, there's a £100 million regeneration programme taking place as we speak.
0:12:45 > 0:12:50With prices currently relatively low perhaps it's a good time to invest.
0:12:50 > 0:12:57We're here to see a two-bedroom mid-terrace house with a guide price of £115,000.
0:12:57 > 0:13:04'For a property within easy reach of central London, that price tag may put a spring in your step.
0:13:04 > 0:13:11'My concerns about this house on Bounces Road could bring you down to Earth with a bump.'
0:13:11 > 0:13:14# ..You bounced my heart around... #
0:13:14 > 0:13:18'It's on a main road for starters.
0:13:18 > 0:13:22'The front garden and boarded-up windows look ominous.
0:13:22 > 0:13:26'There's worse inside because it's not just the road that bounces,
0:13:26 > 0:13:29'the floorboards do, too.'
0:13:29 > 0:13:32# Bouncy bouncy! Bouncy bouncy! #
0:13:34 > 0:13:37My guess is
0:13:37 > 0:13:40it's a severe case of woodworm.
0:13:40 > 0:13:43You can see the tiny little holes!
0:13:43 > 0:13:49I only need to shake that, look at all the powder! It's disgusting!
0:13:49 > 0:13:53You need an expert to assess the damage.
0:13:53 > 0:13:56You don't know how bad this woodworm is.
0:13:56 > 0:13:59It could be in the joists. It can be expensive.
0:13:59 > 0:14:02All I would say is...
0:14:02 > 0:14:05buyer beware.
0:14:07 > 0:14:12'You can treat minor problems with woodworm yourself,
0:14:12 > 0:14:15'but I'd strongly advise an expert assessment.
0:14:15 > 0:14:21'If those little worms have munched through the joists, this could be a major job.
0:14:21 > 0:14:27'This is a decent size room leading to a kitchen and bathroom.
0:14:27 > 0:14:30'Both could do with a complete refit.
0:14:30 > 0:14:36'It's a shame the bathroom isn't upstairs, but it is typical in this area.
0:14:38 > 0:14:42'Much more worrying is the smell of damp and the peeling paper
0:14:42 > 0:14:45'above the doorway.'
0:14:45 > 0:14:49In all honesty, things aren't really getting any better here.
0:14:49 > 0:14:55I wouldn't be surprised if there weren't mushrooms growing up there.
0:14:55 > 0:14:57Oh, there are!
0:15:00 > 0:15:02'First worms, and now mushrooms!
0:15:02 > 0:15:07'It's a bit of a wildlife sanctuary. Is it a safe haven for my money?
0:15:07 > 0:15:12'Perhaps it's time to explore the rest of the property.'
0:15:14 > 0:15:17Upstairs, there are two bedrooms
0:15:17 > 0:15:22and I'm glad to say I'm not bouncing around on the floorboards.
0:15:22 > 0:15:24It's a lot more stable.
0:15:24 > 0:15:29In this room, I really smell damp. Here is where the problem lies.
0:15:29 > 0:15:34Probably something wrong with the roof. Look. Peeling wallpaper.
0:15:34 > 0:15:36A whole load of crumbling wall.
0:15:36 > 0:15:41It could, potentially, be expensive, so get it checked out straight away.
0:15:41 > 0:15:46Now, is there any way you could get the bathroom up here?
0:15:46 > 0:15:49You could think about squeezing in an en suite.
0:15:49 > 0:15:51Then you've got the window.
0:15:51 > 0:15:56When you take into account the area and how much the house will be worth
0:15:56 > 0:15:59it's probably best to leave it.
0:15:59 > 0:16:04'Let's face it, the layout is the only thing you CAN leave.
0:16:04 > 0:16:08'Everything else is rotting, peeling or crumbling.
0:16:08 > 0:16:10'Still, that £115,000 guide price
0:16:10 > 0:16:15'is low this close to central London so there could still be potential.
0:16:15 > 0:16:21'What can a local estate agent tell us about prices in this area?'
0:16:21 > 0:16:24The property, as I see it today,
0:16:24 > 0:16:28I wouldn't put it on the market for more than 130,000.
0:16:28 > 0:16:32Once refurbished to a good standard,
0:16:32 > 0:16:35you could achieve around 165 in the current market.
0:16:35 > 0:16:39I would think it needs 20,000 to 25,000 spending.
0:16:39 > 0:16:45Other things might come up on a survey which might add a bit more.
0:16:45 > 0:16:47'And that would be my worry.
0:16:47 > 0:16:52'Nevertheless, if you could pick it up at the £115,000 guide price
0:16:52 > 0:16:58'and sell it on at £165,000, that's a difference of £50,000!
0:16:58 > 0:17:04'Enough to pay for the work and still make a profit.
0:17:04 > 0:17:08'The market's falling in this area and it's a big risk.
0:17:08 > 0:17:14'For an investor, that means finding out about the local rental market.'
0:17:14 > 0:17:19There is a shortage of two-beds in the area. This would rent well.
0:17:19 > 0:17:24You could probably get 950 to £1,000 per calendar month.
0:17:24 > 0:17:28'You could be looking at an 8.5% return on your investment.'
0:17:28 > 0:17:33The house is rotten and run-down, but is it a good investment?
0:17:33 > 0:17:40The guide price is very appealing, but I'd be cautious, without some thorough research.
0:17:40 > 0:17:43Or the floor could give way on your budget!
0:17:43 > 0:17:46Find out who took the plunge at the auction.
0:17:49 > 0:17:54Lot four, Bounces Road, Edmonton, London. Two-bed mid-terrace house.
0:17:54 > 0:17:57Not going to go below 100.
0:17:59 > 0:18:02Yeah. 100,000 sitting down.
0:18:02 > 0:18:05105? 110?
0:18:05 > 0:18:07115?
0:18:09 > 0:18:12115. 116?
0:18:14 > 0:18:18115, back to you. 116 anywhere else?
0:18:18 > 0:18:20If not...
0:18:20 > 0:18:23116, new spot. 117?
0:18:23 > 0:18:25118?
0:18:26 > 0:18:28119?
0:18:30 > 0:18:32118, down here.
0:18:32 > 0:18:37Anyone else? At £118,000 first time...
0:18:37 > 0:18:39119 in the front. 120?
0:18:39 > 0:18:43121? 122?
0:18:43 > 0:18:45123? 124?
0:18:45 > 0:18:47125? 126?
0:18:47 > 0:18:49127? 128?
0:18:49 > 0:18:54129? 130? 131? 132?
0:18:54 > 0:18:56133? 134?
0:18:56 > 0:19:00Madam, 134? Yeah?
0:19:00 > 0:19:03135? 136?
0:19:03 > 0:19:05137? 138?
0:19:05 > 0:19:08139? 140?
0:19:08 > 0:19:11141? No? No?
0:19:12 > 0:19:18All right. 140,000 with you, madam. 141 anywhere else?
0:19:19 > 0:19:23140 with you. First time. Second time.
0:19:23 > 0:19:25Third and last time...
0:19:25 > 0:19:27Sold, 140.
0:19:27 > 0:19:33'The determined winning bidder was Julia, who doesn't seem deterred
0:19:33 > 0:19:35'by a bit of woodworm and damp.
0:19:35 > 0:19:38'This is Julia's second development project.
0:19:38 > 0:19:42'She's the owner of a hair salon and a full-time mum.
0:19:42 > 0:19:48'Her £140,000 winning bid was £25,000 over the guide price
0:19:48 > 0:19:53'and I'm worried about what that could do to her profit margin.
0:19:53 > 0:20:01'We met up in the most stable part of the house to find out whether she realised what she'd taken on.'
0:20:01 > 0:20:05I initially saw the property on the internet.
0:20:05 > 0:20:07Then I recognised the address.
0:20:07 > 0:20:12I thought, "That's round the corner from my mum's." So I popped down.
0:20:12 > 0:20:16Had a look from the outside and made the appointment.
0:20:16 > 0:20:20I viewed it and brought my cousin with me, who's a builder.
0:20:20 > 0:20:23- Ah!- Which made it a lot easier to decide.
0:20:23 > 0:20:28On first glance, you bounce into that lounge downstairs.
0:20:28 > 0:20:33- You've got that woodworm problem. - Yeah.- Did that not put you off?
0:20:33 > 0:20:35It did, initially.
0:20:35 > 0:20:39Once my cousin who came with me had a look around,
0:20:39 > 0:20:42he assured me it wasn't a problem.
0:20:42 > 0:20:47'Having her cousin's opinion to fall back on may be reassuring for Julia,
0:20:47 > 0:20:53'but she admits there wasn't time for a full survey before auction.'
0:20:53 > 0:20:56The worst scenario, I'm assuming, would be the roof.
0:20:56 > 0:20:59It would cost the extra few thousand
0:20:59 > 0:21:02on top of what it's going to cost to renovate.
0:21:02 > 0:21:08'With family rates from her cousin, she hopes to spend £6,000 to £10,000
0:21:08 > 0:21:12'on getting the basics sorted out.
0:21:12 > 0:21:15'For Julia, it's a risk worth taking.'
0:21:15 > 0:21:21My circumstances were such that I had a lump sum of money in my bank.
0:21:21 > 0:21:27Once the interest rate went down, the best bet was to buy property.
0:21:27 > 0:21:32- If you get £1,000 a month, you get a great yield.- It's my income.
0:21:32 > 0:21:37Hence, the property that I bought prior to this, then this one.
0:21:37 > 0:21:41Fingers crossed, it can domino from each one. That's what I'm hoping.
0:21:41 > 0:21:46- Why property? Is it a passion of yours?- I'm a bit of an alchemist.
0:21:46 > 0:21:50I like to see what needs to be changed and I enjoy the change.
0:21:50 > 0:21:54I like to look at it and feel proud of it.
0:21:54 > 0:22:01'There's a lot to change, but compromises will need to be made if she's to stay on budget.'
0:22:01 > 0:22:06The kitchen and the bathroom, are you going to change those?
0:22:06 > 0:22:09- Not in the beginning.- Really?
0:22:09 > 0:22:14I have tenants that I'm looking to accommodate the premises already.
0:22:14 > 0:22:16I'm not looking to impress as yet.
0:22:16 > 0:22:21- You're looking at touching-up and painting?- Yeah. Pretty much.
0:22:21 > 0:22:25You need help with that kitchen. It's quite tired.
0:22:25 > 0:22:29LAUGHS Well, I will reconsider everything.
0:22:29 > 0:22:31Once I redecorate,
0:22:31 > 0:22:35once I paint and the flooring's done,
0:22:35 > 0:22:39it may itch me to have it changed so I will look at that again.
0:22:39 > 0:22:42What's your predicted timescale?
0:22:42 > 0:22:48Between six weeks and two months, I'm hoping, to have all of it finished.
0:22:48 > 0:22:53Being that family's involved day and night - fingers crossed!
0:22:53 > 0:22:58- You don't look too confident!- No. - Maybe days, not the nights.
0:22:58 > 0:23:04- Julia, good luck. I hope it all goes to plan.- Thank you, Lucy.
0:23:09 > 0:23:14Julia has a big job on her hands. Maybe bigger than she thinks.
0:23:14 > 0:23:18With interest rates low, it makes sense to invest elsewhere
0:23:18 > 0:23:21but I worry what the survey will uncover.
0:23:21 > 0:23:25Find out how she gets on later in the show.
0:23:26 > 0:23:31'Coming up, could the garden be the key to this semi in Wigan?'
0:23:31 > 0:23:36It is enormous! And there is a surprise at the bottom of it.
0:23:36 > 0:23:39'In London, has Julia found the source of the damp?'
0:23:39 > 0:23:43We had a problem in the loft with a tank that was overflowing.
0:23:43 > 0:23:46We removed it, thinking that was the problem.
0:23:48 > 0:23:52'First, what was the diagnosis for Mark's house in Wales?'
0:23:52 > 0:23:56If there is subsidence, back to auction it goes.
0:23:59 > 0:24:05'Fruit machine supplier and first-time property developer Mark thought he'd netted a bargain
0:24:05 > 0:24:12'when he sold his fish and chip shop and bought this three-bedroom house
0:24:12 > 0:24:14'for just £43,000.'
0:24:14 > 0:24:18# Welcome to the house of fun Now I've come of age... #
0:24:18 > 0:24:20'Was he in for a surprise?
0:24:20 > 0:24:25'Peeking in the letter box isn't the same as having a look around.
0:24:25 > 0:24:29'When he eventually did that, it was a bit late.'
0:24:29 > 0:24:35I thought it was going to be a quick paint and rent it straight out.
0:24:35 > 0:24:37No. Don't think so.
0:24:37 > 0:24:41'Mark was hoping to renovate the house for £15,000
0:24:41 > 0:24:45'and have it ready to rent in two months.
0:24:45 > 0:24:49'With signs of subsidence and no renovation experience
0:24:49 > 0:24:54'a lot was riding on the builder's quote.'
0:24:54 > 0:25:01I think if they quote £25,000 or something, I can't see it being viable.
0:25:03 > 0:25:06'Three months have passed since I visited.
0:25:06 > 0:25:10'Mark obviously decided it was worth the gamble.
0:25:10 > 0:25:14'His builders have worked miracles and totally transformed it.
0:25:14 > 0:25:18'But it's been no bed of roses.'
0:25:18 > 0:25:22We started peeling stuff back here and it was never-ending.
0:25:22 > 0:25:27We gutted it back to the shell, back to stone and started from scratch.
0:25:27 > 0:25:31The only thing that hasn't been done are the windows.
0:25:31 > 0:25:34We just cleaned them up.
0:25:34 > 0:25:41Everything else has been done - new floors, walls, new roof, kitchen, bathroom, the lot.
0:25:41 > 0:25:43Total transformation.
0:25:43 > 0:25:48'It certainly is. Even the back garden has had a makeover.
0:25:48 > 0:25:53'Mark's decision to fit a new roof was a practical one.
0:25:53 > 0:25:57'With everything else needing to be replaced, it was a good time.
0:26:00 > 0:26:04'I really want to know what was causing those funny angles.
0:26:04 > 0:26:10'If that was subsidence, it must have made a big dent in the budget.'
0:26:13 > 0:26:17Last time, these floors were really sloping.
0:26:17 > 0:26:24The reason was that these walls were made of brick and downstairs there was no supporting wall.
0:26:24 > 0:26:27We had to replace these walls with studding walls,
0:26:27 > 0:26:30put an RSJ in downstairs,
0:26:30 > 0:26:32force it up as far as we could.
0:26:32 > 0:26:37Still a slight slope left, but it's a lot better.
0:26:37 > 0:26:41'No wonder the place seemed like a funhouse.
0:26:41 > 0:26:44'With nothing to support heavy walls
0:26:44 > 0:26:47'I'm surprised the ceiling didn't collapse.
0:26:47 > 0:26:51'At least Mark hasn't had to shell out for underpinning.
0:26:51 > 0:26:58'It's given him a chance to devote more attention to the kitchen and bathroom.'
0:26:58 > 0:27:04We had the doorway moved across to get the kitchen units in.
0:27:04 > 0:27:08Also, the bathroom... The ceiling was actually collapsing.
0:27:08 > 0:27:13We had to take that out. The dividing wall was taken out.
0:27:13 > 0:27:16We had a nice tiled floor put in.
0:27:16 > 0:27:20We got a nice corner suite in there to make a nice family bathroom.
0:27:20 > 0:27:27'It's a big improvement, but it's still on the ground floor, which might affect resale value.
0:27:27 > 0:27:29'Mark's intention is to rent
0:27:29 > 0:27:33'and it doesn't seem to have put prospective tenants off.'
0:27:33 > 0:27:40We've had four or five people knocking the door, asking for the tenancy.
0:27:40 > 0:27:43People are offering double the bond to get it.
0:27:43 > 0:27:49'Mark has signed an agreement for £440 per calendar month.
0:27:49 > 0:27:52'How much did he end up spending?'
0:27:52 > 0:27:55The builders and materials were ten grand.
0:27:55 > 0:27:59That was the most expensive thing, all the rebuilding.
0:27:59 > 0:28:01I had a new roof put on for 1,500.
0:28:01 > 0:28:05The wooden floors, carpets, underlay complete for £700.
0:28:05 > 0:28:10The kitchen and bathroom I got fitted for three grand.
0:28:10 > 0:28:12All cheap!
0:28:12 > 0:28:16'The final cost of renovating was £19,000.
0:28:16 > 0:28:20'On top of the £43,000 purchase price,
0:28:20 > 0:28:24'that takes Mark's total to £62,000.
0:28:24 > 0:28:29'So he'll be getting about an 8.5% return from his £440 monthly rent.
0:28:29 > 0:28:33'But could it be more and what, if anything,
0:28:33 > 0:28:37'has he added to the resale value?
0:28:45 > 0:28:49'What would two local estate agents think of the house now?'
0:28:51 > 0:28:56A very well modernised three-bedroom terrace property
0:28:56 > 0:29:02in the north end of the valley, in very good condition, seem to be no issues.
0:29:02 > 0:29:07Very saleable and very well presented.
0:29:07 > 0:29:11Incredible. From 12 weeks ago, a dramatic transformation.
0:29:11 > 0:29:14Externally, it's very similar.
0:29:14 > 0:29:17Internally, the refurbishment is modern,
0:29:17 > 0:29:21with small touches that remain part of the period character.
0:29:21 > 0:29:26'But could those small touches make a big difference?
0:29:26 > 0:29:31'Mark has already agreed a rental of £440 per month.
0:29:31 > 0:29:35'How does that compare with other properties?'
0:29:35 > 0:29:39This area is a very popular rental area,
0:29:39 > 0:29:42more so than purchasing.
0:29:42 > 0:29:47I would anticipate to achieve in the region of £425 to £430 per month.
0:29:47 > 0:29:52For rental purposes, this property would be valued at £475 per month.
0:29:52 > 0:29:57Right, I've come in the middle there - 440 on a 12-month tenancy.
0:29:57 > 0:30:02Hopefully I've got some nice tenants who'll keep it long-term.
0:30:03 > 0:30:06'So Mark might have got more.
0:30:06 > 0:30:09'A rental of £475 per calendar month
0:30:09 > 0:30:13'would have taken the return on his £62,000 investment
0:30:13 > 0:30:16'up from 8.5% to 9%.
0:30:16 > 0:30:21'It's all about keeping tenants in the property long-term.
0:30:21 > 0:30:27'If Mark did sell, what could he get for this transformed terrace?'
0:30:27 > 0:30:30If I was going to be marketing this property today,
0:30:30 > 0:30:34I would anticipate achieving a figure of 70,000.
0:30:34 > 0:30:40In my opinion, the selling price for this property would be between 70,000 and 75,000.
0:30:40 > 0:30:44The asking price should be set 77,000, 78,000.
0:30:44 > 0:30:50'That's an £8,000 to £13,000 pre-tax profit for three months' work.'
0:30:50 > 0:30:52That's a nice return.
0:30:52 > 0:30:57It's my first property and I hadn't viewed it! Yeah, really pleased.
0:31:01 > 0:31:05'Mark has another rental property ready to go.
0:31:05 > 0:31:10'It sounds like he's well on his way to his goal of 20 to 30 properties.'
0:31:10 > 0:31:17I've got offers on two properties. Hopefully, they'll come through and we'll crack on from there.
0:31:25 > 0:31:29'I'm in Wigan, birthplace of George Formby,
0:31:29 > 0:31:34'best known for his love of the ukulele and window cleaning.
0:31:34 > 0:31:37'If the auction catalogue is anything to go by,
0:31:37 > 0:31:41'the windows on this property need more than cleaning.'
0:31:41 > 0:31:48This is Whitley in Wigan, a very desirable residential area
0:31:48 > 0:31:50with lovely houses.
0:31:50 > 0:31:54So, when you hear about a three-bedroom semi-detached
0:31:54 > 0:31:58with a guide price of 150,000 to £155,000,
0:31:58 > 0:32:01you think there must be something wrong.
0:32:04 > 0:32:06Huh!
0:32:06 > 0:32:10'These windows don't need cleaning. They need replacing!
0:32:10 > 0:32:14'That's not a suggestion, it's a legal requirement.
0:32:14 > 0:32:18'This was the subject of a compulsory purchase order.
0:32:18 > 0:32:22'There's a whole schedule of works to comply with the legal pack.
0:32:22 > 0:32:27'A quick look at the suspect drainpipe and peeling paint work
0:32:27 > 0:32:31'should confirm it's going to be a major project.
0:32:31 > 0:32:34'No time for leaning on lampposts!'
0:32:37 > 0:32:41It couldn't be much grimier outside. How about inside?
0:32:41 > 0:32:45Well, this is a nice start, an original feature.
0:32:45 > 0:32:49Lots of glass flooding light into the entrance hall.
0:32:49 > 0:32:53Looks like an original banister. Get that stripped back.
0:32:53 > 0:32:59I'm liking it. I'm liking it. Good size space. Living room.
0:32:59 > 0:33:05Open fire, which is nice to have. Needs completely refurbishing.
0:33:05 > 0:33:07Kitchen, well that's a disaster.
0:33:07 > 0:33:11Classic layout of this property, this era.
0:33:11 > 0:33:13Small kitchen.
0:33:13 > 0:33:17It wouldn't be a problem. I'd probably take that wall out.
0:33:17 > 0:33:21The rear sitting room. Nice big window to the garden.
0:33:21 > 0:33:25Put some French doors in. That'd be lovely.
0:33:25 > 0:33:29This is a big room. Bet it's got lovely floorboards.
0:33:29 > 0:33:33All over the house, there are building materials.
0:33:33 > 0:33:37It's like somebody started a renovation job. Hm.
0:33:37 > 0:33:41'By the looks of it, they didn't get very far.
0:33:41 > 0:33:45'This stuff looks as though it's been here for a while.'
0:33:45 > 0:33:49I know it's a bit of a mess, but I really like this house.
0:33:49 > 0:33:53The only thing I would change is the layout upstairs.
0:33:53 > 0:33:57A big double bedroom on the front. Another one on the back.
0:33:57 > 0:34:00Massive bathroom here, separate loo there
0:34:00 > 0:34:02and box room at the front.
0:34:02 > 0:34:07I would convert that into the third bedroom,
0:34:07 > 0:34:12and knock the bathroom and box room together to make a bathroom/toilet.
0:34:12 > 0:34:17That's a much better use of space but intrinsically, it's really nice.
0:34:17 > 0:34:22The front bedroom is huge. You've got a lovely open fire.
0:34:22 > 0:34:24Big bay window. It's great.
0:34:24 > 0:34:27All in all, it's a great house.
0:34:29 > 0:34:33'It feels like a family home and a little rejigging could turn it
0:34:33 > 0:34:36'into something special.'
0:34:37 > 0:34:40There had to be a problem and there is.
0:34:40 > 0:34:44Not only do you have to replace the suite,
0:34:44 > 0:34:49but there is a very nasty crack in that corner.
0:34:51 > 0:34:56'In fact, it's not just one crack, but several. And that's not all.
0:34:56 > 0:35:02'That schedule of works comes with a timescale for completion.
0:35:02 > 0:35:06'Unusually for a house, this is sold as a long leasehold,
0:35:06 > 0:35:08'rather than a freehold.
0:35:08 > 0:35:13'But the ground rent is very low and there is a "missing landlord".
0:35:13 > 0:35:16'The freeholder can't be found.
0:35:16 > 0:35:22'This is not that rare but it's worth getting legal advice.'
0:35:26 > 0:35:29Out the back, a bit of good news.
0:35:29 > 0:35:34You might not expect a particularly big garden, but you would be wrong.
0:35:34 > 0:35:36It is enormous!
0:35:36 > 0:35:41And, what's more, there is a surprise at the bottom of it.
0:35:41 > 0:35:45'That water park at the bottom of the garden
0:35:45 > 0:35:48'is a real jewel in this property's crown.
0:35:48 > 0:35:53'Clearing the undergrowth to reach it will add to your budget.
0:35:53 > 0:35:56'How much does a local estate agent
0:35:56 > 0:36:00'think you'd need to spend to get this property up to standard?'
0:36:00 > 0:36:06You could spend between £20,000 and £25,000 doing the property up.
0:36:06 > 0:36:12It's going to need new windows, possibly moving the bathroom into the bedroom,
0:36:12 > 0:36:16and the kitchen knocking through into a kitchen diner.
0:36:16 > 0:36:24'Add that £25,000 to the £150,000 to £155,000 guide price
0:36:24 > 0:36:29'and that's a total outlay of around £175,000 to £180,000.
0:36:29 > 0:36:32'So could you make your money back?'
0:36:32 > 0:36:39Once the property's refurbished, you'll be looking at between 225,000 and 235,000.
0:36:39 > 0:36:41'If someone got it at guide price
0:36:41 > 0:36:49'they could be looking at a pre-tax profit of as much as £65,000.'
0:36:49 > 0:36:54When it comes to doing the garden, you have got a devil's own job.
0:36:54 > 0:36:58These are cattails. They're a nightmare to get rid of.
0:36:58 > 0:37:00There are other challenges.
0:37:00 > 0:37:05It was bought from the council. You pay them 2% of the purchase price.
0:37:05 > 0:37:10There's a schedule of works. The missing freeholder is an issue.
0:37:10 > 0:37:14The property itself is going to take quite a bit of work.
0:37:14 > 0:37:18Let's see who fancied the challenge at the auction.
0:37:21 > 0:37:25Lot number 119, Whitley in Wigan, on behalf of Wigan Borough Council.
0:37:25 > 0:37:28Looking for 100,000.
0:37:28 > 0:37:31Say 100? 100 here.
0:37:31 > 0:37:34110? 110 there. 120?
0:37:34 > 0:37:36130?
0:37:36 > 0:37:38130, sir. 140?
0:37:38 > 0:37:41Yes? 150?
0:37:41 > 0:37:43150? No?
0:37:43 > 0:37:45145, then?
0:37:45 > 0:37:47Yes? 145. 150, sir?
0:37:47 > 0:37:49No?
0:37:49 > 0:37:52At £145,000, then.
0:37:52 > 0:37:54Looking for 150.
0:37:54 > 0:38:00At 145,000, are we all finished? One? That's 146.
0:38:00 > 0:38:02147?
0:38:02 > 0:38:04147. 148?
0:38:04 > 0:38:06149?
0:38:06 > 0:38:09Yes. 150?
0:38:09 > 0:38:12150, I've got. Looking for 151.
0:38:12 > 0:38:15151. 152? 153?
0:38:16 > 0:38:18154? 155?
0:38:18 > 0:38:21No? OK.
0:38:21 > 0:38:25It's with you, sir, right at the back at 154,000.
0:38:25 > 0:38:27I'm looking for 155.
0:38:27 > 0:38:31I'm going to sell at 154. 154,000 for the first time.
0:38:31 > 0:38:33He's in at a half.
0:38:33 > 0:38:36I need 155 off you, sir. I've got it. 155 and a half.
0:38:36 > 0:38:39156? 156 and a half?
0:38:39 > 0:38:43No? 156 at the back.
0:38:43 > 0:38:46First time at 156,000.
0:38:46 > 0:38:50Second time at £156,000...
0:38:50 > 0:38:53BANGS GAVEL It's yours, sir.
0:38:53 > 0:38:55'At just over the guide price,
0:38:55 > 0:38:59'that winning bid of £156,000 was from Dave,
0:38:59 > 0:39:05'who was at the auction with squash buddies/business partners, Phil and Andy.
0:39:05 > 0:39:08'It's their second investment property,
0:39:08 > 0:39:11'the first they intend to develop.
0:39:11 > 0:39:14'I met up with Dave to find out
0:39:14 > 0:39:19'if the three friends knew what they'd let themselves in for.'
0:39:19 > 0:39:23- So, Dave!- Pleased to meet you. - Why do you want to buy this place?
0:39:23 > 0:39:26We went to the auction.
0:39:26 > 0:39:32- This was second on the list, but the one we intended to buy had been pre-sold.- Ooh.
0:39:32 > 0:39:37So we decided, as the auction started, that we would go for it.
0:39:37 > 0:39:41We set ourselves a budget. We'd never seen inside.
0:39:41 > 0:39:45We thought we would give it a shot. It went up to the maximum.
0:39:45 > 0:39:52- You bought a house you'd never seen. - Yes.- Had you checked the legal pack? - Yes. We downloaded that.
0:39:52 > 0:39:56We knew the legal situation but we hadn't seen inside.
0:39:56 > 0:40:00- We didn't know the state of repair. - Tsk! Tsk!- I know!
0:40:00 > 0:40:05I obviously went completely against what we were supposed to do.
0:40:05 > 0:40:07In for a penny, in for a pound.
0:40:07 > 0:40:11# Some like it hot And some sweat when the heat is on #
0:40:11 > 0:40:14'To be precise, you're in it for £160,000,
0:40:14 > 0:40:20'once the council's 2% charge and legal fees have been added.
0:40:20 > 0:40:22'That's before starting any repairs.
0:40:22 > 0:40:27'If anyone can find their way around the figures, it's Dave.
0:40:27 > 0:40:32'When he's not playing squash, he's an A-level maths teacher.'
0:40:32 > 0:40:36I work for an exam board and set A-level maths questions.
0:40:36 > 0:40:40You set MY A-level maths questions?
0:40:40 > 0:40:43- Possibly... - I'll have words with you later!
0:40:43 > 0:40:48I have a hunch in terms of the timescale it may not be right!
0:40:48 > 0:40:53- I set one of the A-level papers, "maths in context".- Oh.
0:40:53 > 0:40:57Therefore, this is going to produce a great maths question.
0:40:57 > 0:40:59- WHISPERS:- Inside tip, there! - Yeah.
0:40:59 > 0:41:03# One, two, three, four Tell me that you love some more #
0:41:03 > 0:41:07'If you're taking A-level maths any time soon
0:41:07 > 0:41:10'pay close attention to this next bit.'
0:41:10 > 0:41:13The overall cost price is 160,000.
0:41:13 > 0:41:19We're hoping that we will have all the work done for around £30,000.
0:41:19 > 0:41:23That's what we hope for. It may go up to 35. So that's 195.
0:41:23 > 0:41:27Houses similar to this are up for sale at around 235, 240.
0:41:27 > 0:41:32We would aim to sell for even less, to be able to turn it round quickly.
0:41:32 > 0:41:37'The partners hope to come away with a £40,000 to £45,000 pre-tax profit.
0:41:37 > 0:41:41'And they've set themselves a two-month timescale.'
0:41:41 > 0:41:46What experience do you have in the renovation or property world?
0:41:46 > 0:41:50Zero. Apart from the fact that we all live in houses.
0:41:50 > 0:41:54That is the extent of our expertise.
0:41:54 > 0:41:57Who are you going to call in to help you?
0:41:57 > 0:42:00I've got a builder that did work on our house.
0:42:00 > 0:42:03He's going to arrange the people,
0:42:03 > 0:42:07do the schedule and make sure the work is done.
0:42:07 > 0:42:10- He is crucial to your success or failure.- Absolutely.
0:42:10 > 0:42:15It's a question of him getting all the work done on the right time,
0:42:15 > 0:42:20- at a price that we think is reasonable.- Yeah, OK.
0:42:20 > 0:42:23'Dave's planned eight weeks to do the work.
0:42:23 > 0:42:26'I hope his faith in his builder is justified.
0:42:26 > 0:42:29'As well as that schedule of works,
0:42:29 > 0:42:33'the guys agree that the bathroom should be relocated
0:42:33 > 0:42:37'and the kitchen and rear room downstairs opened up.
0:42:37 > 0:42:41'There's a lot riding on this venture.'
0:42:41 > 0:42:46We're all nearing retirement. We've got about three years left.
0:42:46 > 0:42:51So we're hoping that when we retire, we'll carry on doing it part time.
0:42:51 > 0:42:56We do want it to work but it's not the be-all and end-all.
0:42:56 > 0:43:00We're going to give it a shot for a couple of years.
0:43:00 > 0:43:04Good luck. I forgive you for the difficult maths questions.
0:43:04 > 0:43:07We'll try to make them easier in future!
0:43:07 > 0:43:13- I'm out of it!- At least you've got that behind you forever more.
0:43:13 > 0:43:16- Congratulations and good luck. - Thank you.
0:43:23 > 0:43:26Lots of work to be done, then.
0:43:26 > 0:43:30Have Dave and his colleagues done their sums?
0:43:30 > 0:43:34Will they make it all add up? Will there be "fractions" in the group?
0:43:34 > 0:43:40You can find out later. To be sure, we'll be square "routing" for them!
0:43:43 > 0:43:47Time moves on and hopefully work has progressed.
0:43:47 > 0:43:52Have our buyers seen their chances of success grow or wither away?
0:43:52 > 0:43:54Let's go back and find out.
0:43:54 > 0:43:56'Back to north London.
0:43:56 > 0:44:01'Woodworm, damp and neglect had left this two-bedroom terrace
0:44:01 > 0:44:03'feeling rotten and run down.
0:44:10 > 0:44:15'After a couple of months, some family help and a £6,000 budget,
0:44:15 > 0:44:20'Julia felt that her £140,000 auction purchase on Bounces Road
0:44:20 > 0:44:23'might just bounce back.
0:44:23 > 0:44:27'Three and a half months later, has she stayed on budget?
0:44:27 > 0:44:29'Have her finances sprung a leak?'
0:44:29 > 0:44:34I'm really pleased because we kept within the budget.
0:44:34 > 0:44:39Also, it was a very quick finish. Earlier than I thought.
0:44:39 > 0:44:44We managed to get all the building works done within three weeks.
0:44:44 > 0:44:49'I'm amazed! To get everything done on a tight budget is one thing.
0:44:49 > 0:44:52'To do it all in three weeks is miraculous.
0:44:52 > 0:44:56'It helps that Julia's builder is a family member.
0:44:56 > 0:45:01'She also enlisted the help of her parents and brother along the way.
0:45:01 > 0:45:04'This is quite an achievement.
0:45:09 > 0:45:14'There was the woodworm in the living room to sort out as well.'
0:45:14 > 0:45:19We had it completely taken out, resprayed and refloored.
0:45:19 > 0:45:21Everything's fine now.
0:45:21 > 0:45:26'Julia was in two minds about replacing the kitchen and bathroom.
0:45:26 > 0:45:30'With a potential tenant lined up, and an eye on the budget,
0:45:30 > 0:45:32'the decision became easy.'
0:45:32 > 0:45:36In the kitchen, we spent hardly any money. We had it painted.
0:45:36 > 0:45:41Then white goods and floor tiling, keeping the price down.
0:45:41 > 0:45:47'In the bathroom, she's redecorated and fitted a shower attachment.'
0:45:47 > 0:45:53Upstairs, we had the painting done, the carpeting and what-have-you.
0:45:53 > 0:45:58We had the problem in the loft with a tank that was overflowing.
0:45:58 > 0:46:01We removed it, thinking that was the problem.
0:46:01 > 0:46:05It was actually a leaking roof. Had that sealed.
0:46:05 > 0:46:08Ever since, we haven't had any problems.
0:46:11 > 0:46:16'Julia had all the walls replastered and painted here and downstairs.
0:46:16 > 0:46:20'The last thing she needs is a reappearance of that damp problem
0:46:20 > 0:46:23'and those mushrooms above the door.
0:46:23 > 0:46:30'All considered, she must be very pleased with her auction purchase.'
0:46:30 > 0:46:32It's my first experience.
0:46:32 > 0:46:34It was a success.
0:46:34 > 0:46:39Buying the property at 115 guide price to buying it at 140
0:46:39 > 0:46:42and spending 5,000 for completion.
0:46:42 > 0:46:44I'm happy with the end result.
0:46:44 > 0:46:48There's an accomplishment. I'd like to pursue more of these.
0:46:50 > 0:46:52'I'm not surprised.
0:46:52 > 0:46:56'With a tenant lined up to bring in £1,100 per calendar month,
0:46:56 > 0:46:59'for her £145,000 investment,
0:46:59 > 0:47:04'Julia is set to make a pretty good return here, but could it be more?
0:47:04 > 0:47:09'In a difficult market, could she even consider selling?
0:47:16 > 0:47:19'Let's find out what two local estate agents think.'
0:47:22 > 0:47:24Very nice. It's neutral colours.
0:47:24 > 0:47:28The improvements have been done to a high standard.
0:47:28 > 0:47:34Whether it's done to a high enough standard to sell immediately,
0:47:34 > 0:47:36I don't know.
0:47:36 > 0:47:38Considering the carpets,
0:47:38 > 0:47:42I wouldn't say they were the most expensive.
0:47:42 > 0:47:46However, if you were to have a tenant, to accept wear and tear,
0:47:46 > 0:47:49that would be ideal for a rental market, yeah.
0:47:49 > 0:47:54The way the selling market is, I would say wait for 12 months.
0:47:54 > 0:47:58Have a tenancy for 12 months, then review the situation.
0:47:58 > 0:48:03'So Julia pitched her strategy, and the finish she went for, perfectly.
0:48:03 > 0:48:06'Will she be getting the best rental income?
0:48:06 > 0:48:12'She already has a tenant lined up to pay £1,100 per calendar month.'
0:48:12 > 0:48:17The open market is following what the local authority are paying.
0:48:17 > 0:48:22They're looking for lots of property and pay quite a good rate,
0:48:22 > 0:48:26between 950 and £1,000 for two-bedroom accommodation.
0:48:26 > 0:48:33You're in a good location, schools, transportation links through the centre of where the property is.
0:48:33 > 0:48:37Price wise, anything up to £1,050 per calendar month.
0:48:37 > 0:48:41'£1,100 is right up there at the top end
0:48:41 > 0:48:46'and would give Julia around a 9% return.'
0:48:46 > 0:48:49950, 975, thereabouts.
0:48:49 > 0:48:531,000 or thereabouts. So I'm happy. I'm really happy.
0:48:53 > 0:48:55'I'm sure you are, Julia,
0:48:55 > 0:49:00'but will the re-sell valuations make you reconsider your strategy?'
0:49:00 > 0:49:05At the moment, the realistic valuation would be about 185.
0:49:05 > 0:49:11You're looking, price wise, up to the 210 mark, 210,000 as a re-sell.
0:49:11 > 0:49:16'185,000 to £210,000 is quite a spread.
0:49:16 > 0:49:18'The market is uncertain.
0:49:18 > 0:49:25'With investors looking for good rental properties, the top valuation may be achievable.
0:49:25 > 0:49:31'Julia would be looking at a 40,000, 65,000 pre-tax profit if she sold.
0:49:31 > 0:49:34'Not bad for three weeks' work!'
0:49:34 > 0:49:39I had a pretty good idea, checking out beforehand with agents nearby,
0:49:39 > 0:49:45and was given the rough idea that the property would go for 170, 180.
0:49:45 > 0:49:49The peak, 200, I was given the impression.
0:49:49 > 0:49:52So, yeah. I'm happy.
0:49:55 > 0:49:58'With two properties under her belt,
0:49:58 > 0:50:02'Julia's looking forward to more auction success.'
0:50:02 > 0:50:04I'm hoping to continue the same as,
0:50:04 > 0:50:09and hopefully, build a big enough portfolio for me to retire early!
0:50:11 > 0:50:14# One, two, three, four Tell me that... #
0:50:14 > 0:50:18'For first-time developer and A-level maths teacher Dave,
0:50:18 > 0:50:23'turning property into profit is about understanding equations.
0:50:23 > 0:50:27'Even though Dave and squash buddies Phil and Andy
0:50:27 > 0:50:31'hadn't seen inside this three-bed semi in Wigan,
0:50:31 > 0:50:36'they did know that it came with 2% surcharge and a schedule of works
0:50:36 > 0:50:39'that could cost around £30,000 to complete.
0:50:39 > 0:50:43'With similar properties selling locally for up to £235,000,
0:50:43 > 0:50:49'Dave calculated they could bid up to their maximum of £156,000.
0:50:49 > 0:50:51'But has he messed up the maths?
0:50:51 > 0:50:56'Did a failure to do their homework leave the guys with nothing?
0:50:56 > 0:51:02'The six-week deadline's up and it's time to check the answers.'
0:51:05 > 0:51:09'Well, Dave's builder has done a fantastic job.
0:51:09 > 0:51:13'In just five and a half weeks, he's replastered, rewired
0:51:13 > 0:51:16'and reinforced the property.
0:51:16 > 0:51:20'The windows have been replaced, as has the central heating.
0:51:20 > 0:51:22'They had to fit a new roof, too.'
0:51:22 > 0:51:25We thought we could patch it up
0:51:25 > 0:51:30but when they started, there was so much that needed doing,
0:51:30 > 0:51:35we had the whole roof stripped off and a new roof on in three days.
0:51:35 > 0:51:38So it didn't do anything at all.
0:51:38 > 0:51:44'Apart from the schedule of work, Dave and his business partners
0:51:44 > 0:51:50'also wanted to make much-needed adjustments to the layout.'
0:51:50 > 0:51:54This room is the biggest transformation.
0:51:54 > 0:51:58This was a solid wall here. There was a back door here.
0:51:58 > 0:52:00There was a window there.
0:52:00 > 0:52:04We took the whole wall down, made it into a breakfast kitchen.
0:52:04 > 0:52:10Everywhere is full of units - three times the number of units.
0:52:10 > 0:52:16Integrated washer, fridge, freezer. Brand new cooker, hob.
0:52:16 > 0:52:20Because it's linked into the dining room, you can walk from there
0:52:20 > 0:52:23outside onto the decking, onto the garden.
0:52:23 > 0:52:26It's brought the garden into the house.
0:52:26 > 0:52:32'And what a garden, now that the undergrowth has been cut away.
0:52:32 > 0:52:35'With views across the water and new decking,
0:52:35 > 0:52:39'this would be a great place to relax on a summer's afternoon.
0:52:39 > 0:52:43'But what about the layout upstairs?'
0:52:44 > 0:52:50Originally, there was a wall here, so there was a separate toilet.
0:52:50 > 0:52:56The rest of this room was a very small, slightly strange bedroom.
0:52:56 > 0:53:01At the back, there was a bathroom comprised of a bath and wash basin.
0:53:01 > 0:53:06We moved the bathroom from there. We've got a new bathroom suite.
0:53:06 > 0:53:08Shower, heated towel rail
0:53:08 > 0:53:13and at the back of the house we've now got a third bedroom.
0:53:13 > 0:53:18'That third bedroom is also where those ominous cracks were.
0:53:18 > 0:53:20'What's been done about them?'
0:53:20 > 0:53:24There's a specialist way of dealing with them.
0:53:24 > 0:53:29Wall tie things are drilled in from the inside and bars put on.
0:53:29 > 0:53:32Then it's bolted through, bringing everything together.
0:53:32 > 0:53:37Now you can't tell there was ever a crack in the first place.
0:53:37 > 0:53:41'Dave admits he's left all technical details to his builder.
0:53:41 > 0:53:45'With sourcing materials in Phil's and Andy's hands,
0:53:45 > 0:53:51'it's been up to Dave to sort out finances, so how much has it cost?'
0:53:53 > 0:53:57We hoped to spend 30 to 35, but we've gone over.
0:53:57 > 0:54:03We've spent somewhere between 37,000 and 37,500 on top of the purchase price.
0:54:03 > 0:54:07The house has cost about £200,000 to get to the state it's in.
0:54:07 > 0:54:12'That new roof and the cost of clearing out the rubbish
0:54:12 > 0:54:14'contributed to those costs.
0:54:14 > 0:54:18'They spent around £200,000. How much can they expect to make?
0:54:20 > 0:54:26'Can the guys get what they were hoping for from this development?
0:54:26 > 0:54:28'We invited two estate agents
0:54:28 > 0:54:31'to tell us what they think.'
0:54:31 > 0:54:35A couple of things stand out. I do like the garden.
0:54:35 > 0:54:39And I do like the space available upstairs.
0:54:39 > 0:54:42The third bedroom is a good size.
0:54:42 > 0:54:45A large single, good for a family.
0:54:45 > 0:54:50There are a number of three-beds on the market, however this offers more.
0:54:50 > 0:54:54Views across the back. It's more traditional.
0:54:54 > 0:54:57It's in a popular area as well.
0:54:57 > 0:55:01'What valuations would the estate agents put on the place
0:55:01 > 0:55:05'if Dave and his business partners wanted to sell?'
0:55:05 > 0:55:10I would value this property at between £230,000 and £240,000.
0:55:10 > 0:55:14I'd put it on the market for between £240,000 and £250,000.
0:55:14 > 0:55:20'So, they could make a £50,000 pre-tax profit for six weeks' work,
0:55:20 > 0:55:24'but Dave and the guys don't want to be too greedy.'
0:55:24 > 0:55:28If we wanted to hold out, we could maybe get 250.
0:55:28 > 0:55:34But we would be willing to accept just under 240, to make sure it's sold quickly.
0:55:34 > 0:55:40'Dave's builder is just a day or so away from completing the work.
0:55:40 > 0:55:43'I hope they achieve what they're after.
0:55:43 > 0:55:48'If they did rent the property out, could they get a good return?'
0:55:48 > 0:55:52This would rent out for between £600 and £650 per month.
0:55:52 > 0:55:56This property would rent for around £625 a calendar month.
0:55:56 > 0:56:02'That's a 4% return but, for this maths teacher, renting is not the right angle.'
0:56:02 > 0:56:07If you had a property worth 50,000, renting may be worth considering.
0:56:07 > 0:56:09On this, certainly not.
0:56:12 > 0:56:17'For Dave and the guys, renting this place out is a last resort.
0:56:17 > 0:56:21'They're anxious to move on to their next project.
0:56:21 > 0:56:25'This teacher has learned a few lessons here.'
0:56:25 > 0:56:29Having done this in such a short space of time,
0:56:29 > 0:56:34any project, we'll definitely go for it - onwards and upwards.
0:56:34 > 0:56:40'Since we spoke to Dave, they have accepted an offer of £245,000,
0:56:40 > 0:56:45'which adds up to a £45,000 pre-tax profit.'
0:56:48 > 0:56:50That's it for today.
0:56:50 > 0:56:55Hopefully, it's opened your eyes to possibilities and pitfalls.
0:56:55 > 0:57:00- Join us next time on Homes Under The Hammer.- We will see you then.
0:57:21 > 0:57:24Subtitles by Red Bee Media Ltd