Episode 58 Homes Under the Hammer

From cottages to flats, they're available at auction.

First-time buyer or buy-to-let investor,

there might be the property you want under the hammer.

At auction, when the hammer goes down you HAVE exchanged contracts.

There's no chains. You bid. You buy. It's easy to get carried away.

How did our purchasers today get on?

'In Wales, you can view this auction opportunity in a variety of ways.'

There are some strange angles going on there.

'I'm concerned about what's hiding in the woodwork in north London.'

Buyer beware.

'And things don't look that good at this semi in Wigan.'

There is a very nasty crack in that corner there.

'All have been sold at auction.

'We'll find out who bought them when they went under the hammer.'

This is Caerau, a village in south Wales.

Up for auction was a three-bedroom mid-terrace. This is it.

Guess the guide price. It was 39,000 quid.

Outside, it looks in pretty good order, with double-glazed windows.

So, for 39 grand, there must be a catch.

You can't expect much for that kind of money. Or can you?

I like these tiles. I think they're original, judging by this door.

It has this sun pattern thing going on. Very cute.

But, um...

There are some very strange angles going on there.

That could be very serious.

Into the front room. Nice size. Nice to see the open fire.

Lots of light. Doesn't feel dark and dingy.

The rear sitting room through these sliding doors.

Good size space.

A few indications of damp need investigating.

But we like it. Lots of light. Into the kitchen.

It's a good size, but all the units need replacing.

I'd want to rethink the layout to bring the cooker closer

to the work surfaces.

Beyond the kitchen there is a toilet and bathroom.

It's not unusual for the bathroom to be on the ground floor,

but it's strange to walk through the bathroom to get to the toilet.

I'd consider linking them together at the very least.

# I think I'm gonna need some therapy... #

But there's another option.

In the garden, you can see

that the back is not in nearly as good condition as the front.

Neighbours have added an extension.

Maybe there's a chance to relocate that bathroom and create a bedroom.

Time to explore the rest of the house.

Upstairs, it really does feel quite peculiar.

Strange angles. The floor's all over the place.

It's like one of those fairground rides where the floor wobbles.

But you have three reasonably sized rooms here so it's not all bad news.

And having that bathroom downstairs is not the end of the world.

A much bigger problem is this.

A crack that's so big I can put my hand in there.

That indicates to me that any subsidence this house has,

has had, is actually, I think, still happening.

I'd definitely recommend seeking professional help.

If there is ongoing subsidence,

you'd need to spend a serious amount.

Even at that low £39,000 guide price,

it might not be worthwhile.

Let's find out what a local estate agent makes of the property.

'The layout is fairly typical in a cottage such as this.

'It has been let go somewhat.

'I can sense some subsidence, which is not unusual'

for the type of property, however I recommend a full structural survey.

'It may be worth extending.

-'Certainly, I'd consider bringing the bathroom to the first floor.

-How much could that cost?

'To renovate the property I would put a figure of £25,000 on the work.

'To do a double-height extension,'

we need to add about 15,000 onto that figure.

'If you pick this up at the £39,000 guide price,

'you'd be looking at an outlay of 65,000 to 80,000.

'What sort of return could you get?'

In the current market, in the region of 70 to 75,000.

Extended to double-height, with a bathroom on the first floor,

I'd hope to achieve 85,000 to £90,000.

'If your plan was to re-sell, there'd be no advantage in extending.

'With rental values of £400 a month, it might make sense to hold on to it until the market improves.'

# ..Welcome to the house of fun Now I've come of age... #

The property may be a bit like a fairground funhouse,

but did the person who bought it set themselves up for a rough ride? Let's go to the auction.

Lot number 29, the three-bedroom mid-terrace house.

Gatley Street, Caerau.

Can I say 45 for it? 40, to get on. It's worth more than that, surely.

Surely 40 to start me.

38, then? 38, I'm bid. Thank you. 38,000.

It is yours at 38. 38,000. Your bid at 38 now.

40, now? All right, nine then.

39,000. 40, can I?

At 39,000. 40 I'm bid. Thank you, at 40,000.

The hammer's up at 40,000. And one, will you?

At £40,000, it's your bid, sir. Are you all done?

At £40,000. Can I see another one?

One down here, thank you. At 41.

This is no money for it. You're out. I thought you'd get it. 42.

Three, in front of me. 43 in the front. You're out behind.

43 in the front row. I'm selling to him, make no mistake.

You'll go home and realise what a bargain you've missed. £43,000. Shout if I'm missing you.

There is the bid, in the front.

At £43,000, I'm going to sell it to him.

You're both out behind. At £43,000, have you all done?

At £43,000...

It's yours, sir. Thank you.

'The winning bid of £43,000 came from Mark.

'This is his first development project, and it's a big one.

'I met up with him

'to find out whether he knew what he was letting himself in for.'

Mark, good to meet you.

-Congratulations! Why do you want to buy this house?

-Er...

It's just a first property venture.

Just fancied buying it. I looked at the area, found houses selling 75,000 to 100,000.

Found this one for around 40 and thought what could be wrong? Outside, it looked in good shape.

-Right.

-Thought it's going to be a good venture.

-Did you look inside before you bought it?

-No.

-Why?

-I didn't actually get a chance. I had a look through the letter box.

I thought, "It can't be too bad." Outside looked pretty good.

-What did you think when you saw inside?

-I felt sick.

I thought a quick paint and rent it straight out.

DESPONDENT: But, no. Don't think so.

-The next time you buy one...

-Yeah. MARTIN CHUCKLES

I'll be viewing it, don't worry.

'It's a bit late now, but I think Mark has learned a valuable lesson.

'Don't be fooled by low guide prices. They're set for a reason.

'If something seems too good to be true, it probably is.

'But all is not lost. With a bit of know-how and some useful contacts,

'Mark could still turn this project around.'

-What do you do at the moment?

-I own a couple of businesses.

My main business is gaming machines, fruit machines.

Supplying local pubs and takeaways.

I've just sold my chip shops and sandwich bar,

which is where I've got the money from to buy properties.

-In property renovation, what experience have you got?

-Er... Not much! Not a lot!

-Loving your honesty!

-I've got a few phone numbers.

'Blimey! This is a bit of a gamble for Mark.

'I hope he's hitting the jackpot on those fruit machines.

'He'll be pushing it to come up trumps on this place.'

What are you going to do and who's going to do the work?

I've got builders coming in tomorrow to give me some quotes.

I'll strip all the walls back, bond and replaster.

New ceilings, level out the floors downstairs and upstairs.

New kitchen, new bathroom.

Restructure the bathroom. Just a couple of things(!)

Presumably, your budget has been "slightly" extended.

From a tin of paint to about 15 grand.

-Right.

-Hopefully, 15 grand will do it.

# ..I'm gonna gamble everything I've got... #

'£15,000 is a tight budget and if there is subsidence, it won't be enough.'

I'm praying it's not too serious.

If it is subsidence, I've got a big problem. Back to auction it goes!

-Would you consider that option?

-Yeah, if there's too much work.

So what's the cut-off point in your mind?

Well, if they come back to me with a quote of £25,000, I can't see it being viable.

-The quotes from these builders are pretty important.

-Pretty much, yeah.

Is the idea to rent this out or sell it?

Rental. I'm going to get a portfolio of rentals.

-Get as many as I can.

-How many would you like?

-Between 20 and 30.

# ..Viva Las Vegas! #

'Mark certainly has big ambitions.

'If he's going to get that many properties, he'll have to curb those gambling instincts.'

Mark thought he'd hit the jackpot with his first auction.

He made that classic mistake of not visiting the property and it's a lot more work than he'd anticipated.

You could say he's found himself a bit snookered.

Find out how he gets on later in the show.

'I'm off to northeast London in search of a property bargain.

'I think this is an area with great potential.'

Whilst being 20 minutes by train to Liverpool Street,

the heart of the city,

Edmonton has had an image problem in the past.

However, there's a £100 million regeneration programme taking place as we speak.

With prices currently relatively low perhaps it's a good time to invest.

We're here to see a two-bedroom mid-terrace house with a guide price of £115,000.

'For a property within easy reach of central London, that price tag may put a spring in your step.

'My concerns about this house on Bounces Road could bring you down to Earth with a bump.'

# ..You bounced my heart around... #

'It's on a main road for starters.

'The front garden and boarded-up windows look ominous.

'There's worse inside because it's not just the road that bounces,

'the floorboards do, too.'

# Bouncy bouncy! Bouncy bouncy! #

My guess is

it's a severe case of woodworm.

You can see the tiny little holes!

I only need to shake that, look at all the powder! It's disgusting!

You need an expert to assess the damage.

You don't know how bad this woodworm is.

It could be in the joists. It can be expensive.

All I would say is...

buyer beware.

'You can treat minor problems with woodworm yourself,

'but I'd strongly advise an expert assessment.

'If those little worms have munched through the joists, this could be a major job.

'This is a decent size room leading to a kitchen and bathroom.

'Both could do with a complete refit.

'It's a shame the bathroom isn't upstairs, but it is typical in this area.

'Much more worrying is the smell of damp and the peeling paper

'above the doorway.'

In all honesty, things aren't really getting any better here.

I wouldn't be surprised if there weren't mushrooms growing up there.

Oh, there are!

'First worms, and now mushrooms!

'It's a bit of a wildlife sanctuary. Is it a safe haven for my money?

'Perhaps it's time to explore the rest of the property.'

Upstairs, there are two bedrooms

and I'm glad to say I'm not bouncing around on the floorboards.

It's a lot more stable.

In this room, I really smell damp. Here is where the problem lies.

Probably something wrong with the roof. Look. Peeling wallpaper.

A whole load of crumbling wall.

It could, potentially, be expensive, so get it checked out straight away.

Now, is there any way you could get the bathroom up here?

You could think about squeezing in an en suite.

Then you've got the window.

When you take into account the area and how much the house will be worth

it's probably best to leave it.

'Let's face it, the layout is the only thing you CAN leave.

'Everything else is rotting, peeling or crumbling.

'Still, that £115,000 guide price

'is low this close to central London so there could still be potential.

'What can a local estate agent tell us about prices in this area?'

The property, as I see it today,

I wouldn't put it on the market for more than 130,000.

Once refurbished to a good standard,

you could achieve around 165 in the current market.

I would think it needs 20,000 to 25,000 spending.

Other things might come up on a survey which might add a bit more.

'And that would be my worry.

'Nevertheless, if you could pick it up at the £115,000 guide price

'and sell it on at £165,000, that's a difference of £50,000!

'Enough to pay for the work and still make a profit.

'The market's falling in this area and it's a big risk.

'For an investor, that means finding out about the local rental market.'

There is a shortage of two-beds in the area. This would rent well.

You could probably get 950 to £1,000 per calendar month.

'You could be looking at an 8.5% return on your investment.'

The house is rotten and run-down, but is it a good investment?

The guide price is very appealing, but I'd be cautious, without some thorough research.

Or the floor could give way on your budget!

Find out who took the plunge at the auction.

Lot four, Bounces Road, Edmonton, London. Two-bed mid-terrace house.

Not going to go below 100.

Yeah. 100,000 sitting down.

105? 110?

115?

115. 116?

115, back to you. 116 anywhere else?

If not...

116, new spot. 117?

118?

119?

118, down here.

Anyone else? At £118,000 first time...

119 in the front. 120?

121? 122?

123? 124?

125? 126?

127? 128?

129? 130? 131? 132?

133? 134?

Madam, 134? Yeah?

135? 136?

137? 138?

139? 140?

141? No? No?

All right. 140,000 with you, madam. 141 anywhere else?

140 with you. First time. Second time.

Third and last time...

Sold, 140.

'The determined winning bidder was Julia, who doesn't seem deterred

'by a bit of woodworm and damp.

'This is Julia's second development project.

'She's the owner of a hair salon and a full-time mum.

'Her £140,000 winning bid was £25,000 over the guide price

'and I'm worried about what that could do to her profit margin.

'We met up in the most stable part of the house to find out whether she realised what she'd taken on.'

I initially saw the property on the internet.

Then I recognised the address.

I thought, "That's round the corner from my mum's." So I popped down.

Had a look from the outside and made the appointment.

I viewed it and brought my cousin with me, who's a builder.

-Ah!

-Which made it a lot easier to decide.

On first glance, you bounce into that lounge downstairs.

-You've got that woodworm problem.

-Yeah.

-Did that not put you off?

It did, initially.

Once my cousin who came with me had a look around,

he assured me it wasn't a problem.

'Having her cousin's opinion to fall back on may be reassuring for Julia,

'but she admits there wasn't time for a full survey before auction.'

The worst scenario, I'm assuming, would be the roof.

It would cost the extra few thousand

on top of what it's going to cost to renovate.

'With family rates from her cousin, she hopes to spend £6,000 to £10,000

'on getting the basics sorted out.

'For Julia, it's a risk worth taking.'

My circumstances were such that I had a lump sum of money in my bank.

Once the interest rate went down, the best bet was to buy property.

-If you get £1,000 a month, you get a great yield.

-It's my income.

Hence, the property that I bought prior to this, then this one.

Fingers crossed, it can domino from each one. That's what I'm hoping.

-Why property? Is it a passion of yours?

-I'm a bit of an alchemist.

I like to see what needs to be changed and I enjoy the change.

I like to look at it and feel proud of it.

'There's a lot to change, but compromises will need to be made if she's to stay on budget.'

The kitchen and the bathroom, are you going to change those?

-Not in the beginning.

-Really?

I have tenants that I'm looking to accommodate the premises already.

I'm not looking to impress as yet.

-You're looking at touching-up and painting?

-Yeah. Pretty much.

You need help with that kitchen. It's quite tired.

LAUGHS Well, I will reconsider everything.

Once I redecorate,

once I paint and the flooring's done,

it may itch me to have it changed so I will look at that again.

What's your predicted timescale?

Between six weeks and two months, I'm hoping, to have all of it finished.

Being that family's involved day and night - fingers crossed!

-You don't look too confident!

-No.

-Maybe days, not the nights.

-Julia, good luck. I hope it all goes to plan.

-Thank you, Lucy.

Julia has a big job on her hands. Maybe bigger than she thinks.

With interest rates low, it makes sense to invest elsewhere

but I worry what the survey will uncover.

Find out how she gets on later in the show.

'Coming up, could the garden be the key to this semi in Wigan?'

It is enormous! And there is a surprise at the bottom of it.

'In London, has Julia found the source of the damp?'

We had a problem in the loft with a tank that was overflowing.

We removed it, thinking that was the problem.

'First, what was the diagnosis for Mark's house in Wales?'

If there is subsidence, back to auction it goes.

'Fruit machine supplier and first-time property developer Mark thought he'd netted a bargain

'when he sold his fish and chip shop and bought this three-bedroom house

'for just £43,000.'

# Welcome to the house of fun Now I've come of age... #

'Was he in for a surprise?

'Peeking in the letter box isn't the same as having a look around.

'When he eventually did that, it was a bit late.'

I thought it was going to be a quick paint and rent it straight out.

No. Don't think so.

'Mark was hoping to renovate the house for £15,000

'and have it ready to rent in two months.

'With signs of subsidence and no renovation experience

'a lot was riding on the builder's quote.'

I think if they quote £25,000 or something, I can't see it being viable.

'Three months have passed since I visited.

'Mark obviously decided it was worth the gamble.

'His builders have worked miracles and totally transformed it.

'But it's been no bed of roses.'

We started peeling stuff back here and it was never-ending.

We gutted it back to the shell, back to stone and started from scratch.

The only thing that hasn't been done are the windows.

We just cleaned them up.

Everything else has been done - new floors, walls, new roof, kitchen, bathroom, the lot.

Total transformation.

'It certainly is. Even the back garden has had a makeover.

'Mark's decision to fit a new roof was a practical one.

'With everything else needing to be replaced, it was a good time.

'I really want to know what was causing those funny angles.

'If that was subsidence, it must have made a big dent in the budget.'

Last time, these floors were really sloping.

The reason was that these walls were made of brick and downstairs there was no supporting wall.

We had to replace these walls with studding walls,

put an RSJ in downstairs,

force it up as far as we could.

Still a slight slope left, but it's a lot better.

'No wonder the place seemed like a funhouse.

'With nothing to support heavy walls

'I'm surprised the ceiling didn't collapse.

'At least Mark hasn't had to shell out for underpinning.

'It's given him a chance to devote more attention to the kitchen and bathroom.'

We had the doorway moved across to get the kitchen units in.

Also, the bathroom... The ceiling was actually collapsing.

We had to take that out. The dividing wall was taken out.

We had a nice tiled floor put in.

We got a nice corner suite in there to make a nice family bathroom.

'It's a big improvement, but it's still on the ground floor, which might affect resale value.

'Mark's intention is to rent

'and it doesn't seem to have put prospective tenants off.'

We've had four or five people knocking the door, asking for the tenancy.

People are offering double the bond to get it.

'Mark has signed an agreement for £440 per calendar month.

'How much did he end up spending?'

The builders and materials were ten grand.

That was the most expensive thing, all the rebuilding.

I had a new roof put on for 1,500.

The wooden floors, carpets, underlay complete for £700.

The kitchen and bathroom I got fitted for three grand.

All cheap!

'The final cost of renovating was £19,000.

'On top of the £43,000 purchase price,

'that takes Mark's total to £62,000.

'So he'll be getting about an 8.5% return from his £440 monthly rent.

'But could it be more and what, if anything,

'has he added to the resale value?

'What would two local estate agents think of the house now?'

A very well modernised three-bedroom terrace property

in the north end of the valley, in very good condition, seem to be no issues.

Very saleable and very well presented.

Incredible. From 12 weeks ago, a dramatic transformation.

Externally, it's very similar.

Internally, the refurbishment is modern,

with small touches that remain part of the period character.

'But could those small touches make a big difference?

'Mark has already agreed a rental of £440 per month.

'How does that compare with other properties?'

This area is a very popular rental area,

more so than purchasing.

I would anticipate to achieve in the region of £425 to £430 per month.

For rental purposes, this property would be valued at £475 per month.

Right, I've come in the middle there - 440 on a 12-month tenancy.

Hopefully I've got some nice tenants who'll keep it long-term.

'So Mark might have got more.

'A rental of £475 per calendar month

'would have taken the return on his £62,000 investment

'up from 8.5% to 9%.

'It's all about keeping tenants in the property long-term.

'If Mark did sell, what could he get for this transformed terrace?'

If I was going to be marketing this property today,

I would anticipate achieving a figure of 70,000.

In my opinion, the selling price for this property would be between 70,000 and 75,000.

The asking price should be set 77,000, 78,000.

'That's an £8,000 to £13,000 pre-tax profit for three months' work.'

That's a nice return.

It's my first property and I hadn't viewed it! Yeah, really pleased.

'Mark has another rental property ready to go.

'It sounds like he's well on his way to his goal of 20 to 30 properties.'

I've got offers on two properties. Hopefully, they'll come through and we'll crack on from there.

'I'm in Wigan, birthplace of George Formby,

'best known for his love of the ukulele and window cleaning.

'If the auction catalogue is anything to go by,

'the windows on this property need more than cleaning.'

This is Whitley in Wigan, a very desirable residential area

with lovely houses.

So, when you hear about a three-bedroom semi-detached

with a guide price of 150,000 to £155,000,

you think there must be something wrong.

Huh!

'These windows don't need cleaning. They need replacing!

'That's not a suggestion, it's a legal requirement.

'This was the subject of a compulsory purchase order.

'There's a whole schedule of works to comply with the legal pack.

'A quick look at the suspect drainpipe and peeling paint work

'should confirm it's going to be a major project.

'No time for leaning on lampposts!'

It couldn't be much grimier outside. How about inside?

Well, this is a nice start, an original feature.

Lots of glass flooding light into the entrance hall.

Looks like an original banister. Get that stripped back.

I'm liking it. I'm liking it. Good size space. Living room.

Open fire, which is nice to have. Needs completely refurbishing.

Kitchen, well that's a disaster.

Classic layout of this property, this era.

Small kitchen.

It wouldn't be a problem. I'd probably take that wall out.

The rear sitting room. Nice big window to the garden.

Put some French doors in. That'd be lovely.

This is a big room. Bet it's got lovely floorboards.

All over the house, there are building materials.

It's like somebody started a renovation job. Hm.

'By the looks of it, they didn't get very far.

'This stuff looks as though it's been here for a while.'

I know it's a bit of a mess, but I really like this house.

The only thing I would change is the layout upstairs.

A big double bedroom on the front. Another one on the back.

Massive bathroom here, separate loo there

and box room at the front.

I would convert that into the third bedroom,

and knock the bathroom and box room together to make a bathroom/toilet.

That's a much better use of space but intrinsically, it's really nice.

The front bedroom is huge. You've got a lovely open fire.

Big bay window. It's great.

All in all, it's a great house.

'It feels like a family home and a little rejigging could turn it

'into something special.'

There had to be a problem and there is.

Not only do you have to replace the suite,

but there is a very nasty crack in that corner.

'In fact, it's not just one crack, but several. And that's not all.

'That schedule of works comes with a timescale for completion.

'Unusually for a house, this is sold as a long leasehold,

'rather than a freehold.

'But the ground rent is very low and there is a "missing landlord".

'The freeholder can't be found.

'This is not that rare but it's worth getting legal advice.'

Out the back, a bit of good news.

You might not expect a particularly big garden, but you would be wrong.

It is enormous!

And, what's more, there is a surprise at the bottom of it.

'That water park at the bottom of the garden

'is a real jewel in this property's crown.

'Clearing the undergrowth to reach it will add to your budget.

'How much does a local estate agent

'think you'd need to spend to get this property up to standard?'

You could spend between £20,000 and £25,000 doing the property up.

It's going to need new windows, possibly moving the bathroom into the bedroom,

and the kitchen knocking through into a kitchen diner.

'Add that £25,000 to the £150,000 to £155,000 guide price

'and that's a total outlay of around £175,000 to £180,000.

'So could you make your money back?'

Once the property's refurbished, you'll be looking at between 225,000 and 235,000.

'If someone got it at guide price

'they could be looking at a pre-tax profit of as much as £65,000.'

When it comes to doing the garden, you have got a devil's own job.

These are cattails. They're a nightmare to get rid of.

There are other challenges.

It was bought from the council. You pay them 2% of the purchase price.

There's a schedule of works. The missing freeholder is an issue.

The property itself is going to take quite a bit of work.

Let's see who fancied the challenge at the auction.

Lot number 119, Whitley in Wigan, on behalf of Wigan Borough Council.

Looking for 100,000.

Say 100? 100 here.

110? 110 there. 120?

130?

130, sir. 140?

Yes? 150?

150? No?

145, then?

Yes? 145. 150, sir?

No?

At £145,000, then.

Looking for 150.

At 145,000, are we all finished? One? That's 146.

147?

147. 148?

149?

Yes. 150?

150, I've got. Looking for 151.

151. 152? 153?

154? 155?

No? OK.

It's with you, sir, right at the back at 154,000.

I'm looking for 155.

I'm going to sell at 154. 154,000 for the first time.

He's in at a half.

I need 155 off you, sir. I've got it. 155 and a half.

156? 156 and a half?

No? 156 at the back.

First time at 156,000.

Second time at £156,000...

BANGS GAVEL It's yours, sir.

'At just over the guide price,

'that winning bid of £156,000 was from Dave,

'who was at the auction with squash buddies/business partners, Phil and Andy.

'It's their second investment property,

'the first they intend to develop.

'I met up with Dave to find out

'if the three friends knew what they'd let themselves in for.'

-So, Dave!

-Pleased to meet you.

-Why do you want to buy this place?

We went to the auction.

-This was second on the list, but the one we intended to buy had been pre-sold.

-Ooh.

So we decided, as the auction started, that we would go for it.

We set ourselves a budget. We'd never seen inside.

We thought we would give it a shot. It went up to the maximum.

-You bought a house you'd never seen.

-Yes.

-Had you checked the legal pack?

-Yes. We downloaded that.

We knew the legal situation but we hadn't seen inside.

-We didn't know the state of repair.

-Tsk! Tsk!

-I know!

I obviously went completely against what we were supposed to do.

In for a penny, in for a pound.

# Some like it hot And some sweat when the heat is on #

'To be precise, you're in it for £160,000,

'once the council's 2% charge and legal fees have been added.

'That's before starting any repairs.

'If anyone can find their way around the figures, it's Dave.

'When he's not playing squash, he's an A-level maths teacher.'

I work for an exam board and set A-level maths questions.

You set MY A-level maths questions?

-Possibly...

-I'll have words with you later!

I have a hunch in terms of the timescale it may not be right!

-I set one of the A-level papers, "maths in context".

-Oh.

Therefore, this is going to produce a great maths question.

-WHISPERS:

-Inside tip, there!

-Yeah.

# One, two, three, four Tell me that you love some more #

'If you're taking A-level maths any time soon

'pay close attention to this next bit.'

The overall cost price is 160,000.

We're hoping that we will have all the work done for around £30,000.

That's what we hope for. It may go up to 35. So that's 195.

Houses similar to this are up for sale at around 235, 240.

We would aim to sell for even less, to be able to turn it round quickly.

'The partners hope to come away with a £40,000 to £45,000 pre-tax profit.

'And they've set themselves a two-month timescale.'

What experience do you have in the renovation or property world?

Zero. Apart from the fact that we all live in houses.

That is the extent of our expertise.

Who are you going to call in to help you?

I've got a builder that did work on our house.

He's going to arrange the people,

do the schedule and make sure the work is done.

-He is crucial to your success or failure.

-Absolutely.

It's a question of him getting all the work done on the right time,

-at a price that we think is reasonable.

-Yeah, OK.

'Dave's planned eight weeks to do the work.

'I hope his faith in his builder is justified.

'As well as that schedule of works,

'the guys agree that the bathroom should be relocated

'and the kitchen and rear room downstairs opened up.

'There's a lot riding on this venture.'

We're all nearing retirement. We've got about three years left.

So we're hoping that when we retire, we'll carry on doing it part time.

We do want it to work but it's not the be-all and end-all.

We're going to give it a shot for a couple of years.

Good luck. I forgive you for the difficult maths questions.

We'll try to make them easier in future!

-I'm out of it!

-At least you've got that behind you forever more.

-Congratulations and good luck.

-Thank you.

Lots of work to be done, then.

Have Dave and his colleagues done their sums?

Will they make it all add up? Will there be "fractions" in the group?

You can find out later. To be sure, we'll be square "routing" for them!

Time moves on and hopefully work has progressed.

Have our buyers seen their chances of success grow or wither away?

Let's go back and find out.

'Back to north London.

'Woodworm, damp and neglect had left this two-bedroom terrace

'feeling rotten and run down.

'After a couple of months, some family help and a £6,000 budget,

'Julia felt that her £140,000 auction purchase on Bounces Road

'might just bounce back.

'Three and a half months later, has she stayed on budget?

'Have her finances sprung a leak?'

I'm really pleased because we kept within the budget.

Also, it was a very quick finish. Earlier than I thought.

We managed to get all the building works done within three weeks.

'I'm amazed! To get everything done on a tight budget is one thing.

'To do it all in three weeks is miraculous.

'It helps that Julia's builder is a family member.

'She also enlisted the help of her parents and brother along the way.

'This is quite an achievement.

'There was the woodworm in the living room to sort out as well.'

We had it completely taken out, resprayed and refloored.

Everything's fine now.

'Julia was in two minds about replacing the kitchen and bathroom.

'With a potential tenant lined up, and an eye on the budget,

'the decision became easy.'

In the kitchen, we spent hardly any money. We had it painted.

Then white goods and floor tiling, keeping the price down.

'In the bathroom, she's redecorated and fitted a shower attachment.'

Upstairs, we had the painting done, the carpeting and what-have-you.

We had the problem in the loft with a tank that was overflowing.

We removed it, thinking that was the problem.

It was actually a leaking roof. Had that sealed.

Ever since, we haven't had any problems.

'Julia had all the walls replastered and painted here and downstairs.

'The last thing she needs is a reappearance of that damp problem

'and those mushrooms above the door.

'All considered, she must be very pleased with her auction purchase.'

It's my first experience.

It was a success.

Buying the property at 115 guide price to buying it at 140

and spending 5,000 for completion.

I'm happy with the end result.

There's an accomplishment. I'd like to pursue more of these.

'I'm not surprised.

'With a tenant lined up to bring in £1,100 per calendar month,

'for her £145,000 investment,

'Julia is set to make a pretty good return here, but could it be more?

'In a difficult market, could she even consider selling?

'Let's find out what two local estate agents think.'

Very nice. It's neutral colours.

The improvements have been done to a high standard.

Whether it's done to a high enough standard to sell immediately,

I don't know.

Considering the carpets,

I wouldn't say they were the most expensive.

However, if you were to have a tenant, to accept wear and tear,

that would be ideal for a rental market, yeah.

The way the selling market is, I would say wait for 12 months.

Have a tenancy for 12 months, then review the situation.

'So Julia pitched her strategy, and the finish she went for, perfectly.

'Will she be getting the best rental income?

'She already has a tenant lined up to pay £1,100 per calendar month.'

The open market is following what the local authority are paying.

They're looking for lots of property and pay quite a good rate,

between 950 and £1,000 for two-bedroom accommodation.

You're in a good location, schools, transportation links through the centre of where the property is.

Price wise, anything up to £1,050 per calendar month.

'£1,100 is right up there at the top end

'and would give Julia around a 9% return.'

950, 975, thereabouts.

1,000 or thereabouts. So I'm happy. I'm really happy.

'I'm sure you are, Julia,

'but will the re-sell valuations make you reconsider your strategy?'

At the moment, the realistic valuation would be about 185.

You're looking, price wise, up to the 210 mark, 210,000 as a re-sell.

'185,000 to £210,000 is quite a spread.

'The market is uncertain.

'With investors looking for good rental properties, the top valuation may be achievable.

'Julia would be looking at a 40,000, 65,000 pre-tax profit if she sold.

'Not bad for three weeks' work!'

I had a pretty good idea, checking out beforehand with agents nearby,

and was given the rough idea that the property would go for 170, 180.

The peak, 200, I was given the impression.

So, yeah. I'm happy.

'With two properties under her belt,

'Julia's looking forward to more auction success.'

I'm hoping to continue the same as,

and hopefully, build a big enough portfolio for me to retire early!

# One, two, three, four Tell me that... #

'For first-time developer and A-level maths teacher Dave,

'turning property into profit is about understanding equations.

'Even though Dave and squash buddies Phil and Andy

'hadn't seen inside this three-bed semi in Wigan,

'they did know that it came with 2% surcharge and a schedule of works

'that could cost around £30,000 to complete.

'With similar properties selling locally for up to £235,000,

'Dave calculated they could bid up to their maximum of £156,000.

'But has he messed up the maths?

'Did a failure to do their homework leave the guys with nothing?

'The six-week deadline's up and it's time to check the answers.'

'Well, Dave's builder has done a fantastic job.

'In just five and a half weeks, he's replastered, rewired

'and reinforced the property.

'The windows have been replaced, as has the central heating.

'They had to fit a new roof, too.'

We thought we could patch it up

but when they started, there was so much that needed doing,

we had the whole roof stripped off and a new roof on in three days.

So it didn't do anything at all.

'Apart from the schedule of work, Dave and his business partners

'also wanted to make much-needed adjustments to the layout.'

This room is the biggest transformation.

This was a solid wall here. There was a back door here.

There was a window there.

We took the whole wall down, made it into a breakfast kitchen.

Everywhere is full of units - three times the number of units.

Integrated washer, fridge, freezer. Brand new cooker, hob.

Because it's linked into the dining room, you can walk from there

outside onto the decking, onto the garden.

It's brought the garden into the house.

'And what a garden, now that the undergrowth has been cut away.

'With views across the water and new decking,

'this would be a great place to relax on a summer's afternoon.

'But what about the layout upstairs?'

Originally, there was a wall here, so there was a separate toilet.

The rest of this room was a very small, slightly strange bedroom.

At the back, there was a bathroom comprised of a bath and wash basin.

We moved the bathroom from there. We've got a new bathroom suite.

Shower, heated towel rail

and at the back of the house we've now got a third bedroom.

'That third bedroom is also where those ominous cracks were.

'What's been done about them?'

There's a specialist way of dealing with them.

Wall tie things are drilled in from the inside and bars put on.

Then it's bolted through, bringing everything together.

Now you can't tell there was ever a crack in the first place.

'Dave admits he's left all technical details to his builder.

'With sourcing materials in Phil's and Andy's hands,

'it's been up to Dave to sort out finances, so how much has it cost?'

We hoped to spend 30 to 35, but we've gone over.

We've spent somewhere between 37,000 and 37,500 on top of the purchase price.

The house has cost about £200,000 to get to the state it's in.

'That new roof and the cost of clearing out the rubbish

'contributed to those costs.

'They spent around £200,000. How much can they expect to make?

'Can the guys get what they were hoping for from this development?

'We invited two estate agents

'to tell us what they think.'

A couple of things stand out. I do like the garden.

And I do like the space available upstairs.

The third bedroom is a good size.

A large single, good for a family.

There are a number of three-beds on the market, however this offers more.

Views across the back. It's more traditional.

It's in a popular area as well.

'What valuations would the estate agents put on the place

'if Dave and his business partners wanted to sell?'

I would value this property at between £230,000 and £240,000.

I'd put it on the market for between £240,000 and £250,000.

'So, they could make a £50,000 pre-tax profit for six weeks' work,

'but Dave and the guys don't want to be too greedy.'

If we wanted to hold out, we could maybe get 250.

But we would be willing to accept just under 240, to make sure it's sold quickly.

'Dave's builder is just a day or so away from completing the work.

'I hope they achieve what they're after.

'If they did rent the property out, could they get a good return?'

This would rent out for between £600 and £650 per month.

This property would rent for around £625 a calendar month.

'That's a 4% return but, for this maths teacher, renting is not the right angle.'

If you had a property worth 50,000, renting may be worth considering.

On this, certainly not.

'For Dave and the guys, renting this place out is a last resort.

'They're anxious to move on to their next project.

'This teacher has learned a few lessons here.'

Having done this in such a short space of time,

any project, we'll definitely go for it - onwards and upwards.

'Since we spoke to Dave, they have accepted an offer of £245,000,

'which adds up to a £45,000 pre-tax profit.'

That's it for today.

Hopefully, it's opened your eyes to possibilities and pitfalls.

-Join us next time on Homes Under The Hammer.

-We will see you then.

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