Episode 58 Homes Under the Hammer


Episode 58

Martin Roberts and Lucy Alexander visit an auction opportunity in south Wales, a two-bed terrace in north London with something hiding in the woodwork and a semi in Wigan.


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Transcript


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

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

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there might be the property you want under the hammer.

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

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

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How did our purchasers today get on?

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

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There are some strange angles going on there.

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

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Buyer beware.

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

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There is a very nasty crack in that corner there.

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'All have been sold at auction.

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

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This is Caerau, a village in south Wales.

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

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

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

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

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

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

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

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But, um...

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There are some very strange angles going on there.

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That could be very serious.

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

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

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The rear sitting room through these sliding doors.

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Good size space.

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A few indications of damp need investigating.

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

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

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

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to the work surfaces.

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Beyond the kitchen there is a toilet and bathroom.

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

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

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

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

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But there's another option.

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In the garden, you can see

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

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Neighbours have added an extension.

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

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Time to explore the rest of the house.

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Upstairs, it really does feel quite peculiar.

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

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

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

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

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A much bigger problem is this.

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

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That indicates to me that any subsidence this house has,

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

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I'd definitely recommend seeking professional help.

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If there is ongoing subsidence,

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you'd need to spend a serious amount.

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Even at that low £39,000 guide price,

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it might not be worthwhile.

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

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

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'It has been let go somewhat.

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

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

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'It may be worth extending.

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

-How much could that cost?

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

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'To do a double-height extension,'

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

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

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

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'What sort of return could you get?'

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

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

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

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

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

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

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The property may be a bit like a fairground funhouse,

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

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

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Gatley Street, Caerau.

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

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Surely 40 to start me.

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

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

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40, now? All right, nine then.

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39,000. 40, can I?

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

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

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

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At £40,000. Can I see another one?

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One down here, thank you. At 41.

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

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

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

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

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There is the bid, in the front.

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

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

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At £43,000...

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It's yours, sir. Thank you.

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

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

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'I met up with him

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

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Mark, good to meet you.

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

-Er...

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It's just a first property venture.

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

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

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-Right.

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

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-Did you look inside before you bought it?

-No.

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-Why?

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

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

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-What did you think when you saw inside?

-I felt sick.

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I thought a quick paint and rent it straight out.

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

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-The next time you buy one...

-Yeah. MARTIN CHUCKLES

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

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

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

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

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

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'Mark could still turn this project around.'

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-What do you do at the moment?

-I own a couple of businesses.

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My main business is gaming machines, fruit machines.

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Supplying local pubs and takeaways.

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

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

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-In property renovation, what experience have you got?

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

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-Loving your honesty!

-I've got a few phone numbers.

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

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

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

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

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

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

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New ceilings, level out the floors downstairs and upstairs.

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New kitchen, new bathroom.

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

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Presumably, your budget has been "slightly" extended.

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From a tin of paint to about 15 grand.

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-Right.

-Hopefully, 15 grand will do it.

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

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

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I'm praying it's not too serious.

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

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-Would you consider that option?

-Yeah, if there's too much work.

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

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

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-The quotes from these builders are pretty important.

-Pretty much, yeah.

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Is the idea to rent this out or sell it?

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

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-Get as many as I can.

-How many would you like?

-Between 20 and 30.

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# ..Viva Las Vegas! #

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'Mark certainly has big ambitions.

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

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

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

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

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Find out how he gets on later in the show.

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

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

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Whilst being 20 minutes by train to Liverpool Street,

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the heart of the city,

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Edmonton has had an image problem in the past.

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

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

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

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

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

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

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'It's on a main road for starters.

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

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

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'the floorboards do, too.'

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# Bouncy bouncy! Bouncy bouncy! #

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My guess is

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it's a severe case of woodworm.

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You can see the tiny little holes!

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

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You need an expert to assess the damage.

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You don't know how bad this woodworm is.

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

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All I would say is...

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buyer beware.

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'You can treat minor problems with woodworm yourself,

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'but I'd strongly advise an expert assessment.

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

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

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'Both could do with a complete refit.

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

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

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'above the doorway.'

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

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

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Oh, there are!

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'First worms, and now mushrooms!

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

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

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Upstairs, there are two bedrooms

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

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It's a lot more stable.

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

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

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A whole load of crumbling wall.

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

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

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You could think about squeezing in an en suite.

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Then you've got the window.

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

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it's probably best to leave it.

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

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'Everything else is rotting, peeling or crumbling.

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'Still, that £115,000 guide price

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

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

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The property, as I see it today,

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

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Once refurbished to a good standard,

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you could achieve around 165 in the current market.

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

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

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'And that would be my worry.

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

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

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

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

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

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

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

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

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

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

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Or the floor could give way on your budget!

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Find out who took the plunge at the auction.

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

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Not going to go below 100.

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Yeah. 100,000 sitting down.

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105? 110?

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115?

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115. 116?

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115, back to you. 116 anywhere else?

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If not...

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116, new spot. 117?

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118?

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119?

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118, down here.

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

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119 in the front. 120?

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121? 122?

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123? 124?

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125? 126?

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127? 128?

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129? 130? 131? 132?

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133? 134?

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Madam, 134? Yeah?

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135? 136?

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137? 138?

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139? 140?

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141? No? No?

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

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140 with you. First time. Second time.

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Third and last time...

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Sold, 140.

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

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'by a bit of woodworm and damp.

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'This is Julia's second development project.

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

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

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

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

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I initially saw the property on the internet.

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Then I recognised the address.

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

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Had a look from the outside and made the appointment.

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

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-Ah!

-Which made it a lot easier to decide.

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On first glance, you bounce into that lounge downstairs.

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-You've got that woodworm problem.

-Yeah.

-Did that not put you off?

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It did, initially.

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

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he assured me it wasn't a problem.

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

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

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

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It would cost the extra few thousand

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

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

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'on getting the basics sorted out.

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

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

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

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

-It's my income.

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

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

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-Why property? Is it a passion of yours?

-I'm a bit of an alchemist.

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

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

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

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

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-Not in the beginning.

-Really?

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

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I'm not looking to impress as yet.

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

-Yeah. Pretty much.

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

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LAUGHS Well, I will reconsider everything.

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Once I redecorate,

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once I paint and the flooring's done,

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

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What's your predicted timescale?

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

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

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-You don't look too confident!

-No.

-Maybe days, not the nights.

0:22:530:22:58

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

-Thank you, Lucy.

0:22:580:23:04

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

0:23:090:23:14

With interest rates low, it makes sense to invest elsewhere

0:23:140:23:18

but I worry what the survey will uncover.

0:23:180:23:21

Find out how she gets on later in the show.

0:23:210:23:25

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

0:23:260:23:31

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

0:23:310:23:36

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

0:23:360:23:39

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

0:23:390:23:43

We removed it, thinking that was the problem.

0:23:430:23:46

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

0:23:480:23:52

If there is subsidence, back to auction it goes.

0:23:520:23:56

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

0:23:590:24:05

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

0:24:050:24:12

'for just £43,000.'

0:24:120:24:14

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

0:24:140:24:18

'Was he in for a surprise?

0:24:180:24:20

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

0:24:200:24:25

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

0:24:250:24:29

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

0:24:290:24:35

No. Don't think so.

0:24:350:24:37

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

0:24:370:24:41

'and have it ready to rent in two months.

0:24:410:24:45

'With signs of subsidence and no renovation experience

0:24:450:24:49

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

0:24:490:24:54

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

0:24:540:25:01

'Three months have passed since I visited.

0:25:030:25:06

'Mark obviously decided it was worth the gamble.

0:25:060:25:10

'His builders have worked miracles and totally transformed it.

0:25:100:25:14

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

0:25:140:25:18

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

0:25:180:25:22

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

0:25:220:25:27

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

0:25:270:25:31

We just cleaned them up.

0:25:310:25:34

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

0:25:340:25:41

Total transformation.

0:25:410:25:43

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

0:25:430:25:48

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

0:25:480:25:53

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

0:25:530:25:57

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

0:26:000:26:04

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

0:26:040:26:10

Last time, these floors were really sloping.

0:26:130:26:17

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

0:26:170:26:24

We had to replace these walls with studding walls,

0:26:240:26:27

put an RSJ in downstairs,

0:26:270:26:30

force it up as far as we could.

0:26:300:26:32

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

0:26:320:26:37

'No wonder the place seemed like a funhouse.

0:26:370:26:41

'With nothing to support heavy walls

0:26:410:26:44

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

0:26:440:26:47

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

0:26:470:26:51

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

0:26:510:26:58

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

0:26:580:27:04

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

0:27:040:27:08

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

0:27:080:27:13

We had a nice tiled floor put in.

0:27:130:27:16

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

0:27:160:27:20

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

0:27:200:27:27

'Mark's intention is to rent

0:27:270:27:29

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

0:27:290:27:33

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

0:27:330:27:40

People are offering double the bond to get it.

0:27:400:27:43

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

0:27:430:27:49

'How much did he end up spending?'

0:27:490:27:52

The builders and materials were ten grand.

0:27:520:27:55

That was the most expensive thing, all the rebuilding.

0:27:550:27:59

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

0:27:590:28:01

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

0:28:010:28:05

The kitchen and bathroom I got fitted for three grand.

0:28:050:28:10

All cheap!

0:28:100:28:12

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

0:28:120:28:16

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

0:28:160:28:20

'that takes Mark's total to £62,000.

0:28:200:28:24

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

0:28:240:28:29

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

0:28:290:28:33

'has he added to the resale value?

0:28:330:28:37

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

0:28:450:28:49

A very well modernised three-bedroom terrace property

0:28:510:28:56

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

0:28:560:29:02

Very saleable and very well presented.

0:29:020:29:07

Incredible. From 12 weeks ago, a dramatic transformation.

0:29:070:29:11

Externally, it's very similar.

0:29:110:29:14

Internally, the refurbishment is modern,

0:29:140:29:17

with small touches that remain part of the period character.

0:29:170:29:21

'But could those small touches make a big difference?

0:29:210:29:26

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

0:29:260:29:31

'How does that compare with other properties?'

0:29:310:29:35

This area is a very popular rental area,

0:29:350:29:39

more so than purchasing.

0:29:390:29:42

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

0:29:420:29:47

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

0:29:470:29:52

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

0:29:520:29:57

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

0:29:570:30:02

'So Mark might have got more.

0:30:030:30:06

'A rental of £475 per calendar month

0:30:060:30:09

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

0:30:090:30:13

'up from 8.5% to 9%.

0:30:130:30:16

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

0:30:160:30:21

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

0:30:210:30:27

If I was going to be marketing this property today,

0:30:270:30:30

I would anticipate achieving a figure of 70,000.

0:30:300:30:34

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

0:30:340:30:40

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

0:30:400:30:44

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

0:30:440:30:50

That's a nice return.

0:30:500:30:52

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

0:30:520:30:57

'Mark has another rental property ready to go.

0:31:010:31:05

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

0:31:050:31:10

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

0:31:100:31:17

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

0:31:250:31:29

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

0:31:290:31:34

'If the auction catalogue is anything to go by,

0:31:340:31:37

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

0:31:370:31:41

This is Whitley in Wigan, a very desirable residential area

0:31:410:31:48

with lovely houses.

0:31:480:31:50

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

0:31:500:31:54

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

0:31:540:31:58

you think there must be something wrong.

0:31:580:32:01

Huh!

0:32:040:32:06

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

0:32:060:32:10

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

0:32:100:32:14

'This was the subject of a compulsory purchase order.

0:32:140:32:18

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

0:32:180:32:22

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

0:32:220:32:27

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

0:32:270:32:31

'No time for leaning on lampposts!'

0:32:310:32:34

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

0:32:370:32:41

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

0:32:410:32:45

Lots of glass flooding light into the entrance hall.

0:32:450:32:49

Looks like an original banister. Get that stripped back.

0:32:490:32:53

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

0:32:530:32:59

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

0:32:590:33:05

Kitchen, well that's a disaster.

0:33:050:33:07

Classic layout of this property, this era.

0:33:070:33:11

Small kitchen.

0:33:110:33:13

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

0:33:130:33:17

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

0:33:170:33:21

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

0:33:210:33:25

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

0:33:250:33:29

All over the house, there are building materials.

0:33:290:33:33

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

0:33:330:33:37

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

0:33:370:33:41

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

0:33:410:33:45

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

0:33:450:33:49

The only thing I would change is the layout upstairs.

0:33:490:33:53

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

0:33:530:33:57

Massive bathroom here, separate loo there

0:33:570:34:00

and box room at the front.

0:34:000:34:02

I would convert that into the third bedroom,

0:34:020:34:07

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

0:34:070:34:12

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

0:34:120:34:17

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

0:34:170:34:22

Big bay window. It's great.

0:34:220:34:24

All in all, it's a great house.

0:34:240:34:27

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

0:34:290:34:33

'into something special.'

0:34:330:34:36

There had to be a problem and there is.

0:34:370:34:40

Not only do you have to replace the suite,

0:34:400:34:44

but there is a very nasty crack in that corner.

0:34:440:34:49

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

0:34:510:34:56

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

0:34:560:35:02

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

0:35:020:35:06

'rather than a freehold.

0:35:060:35:08

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

0:35:080:35:13

'The freeholder can't be found.

0:35:130:35:16

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

0:35:160:35:22

Out the back, a bit of good news.

0:35:260:35:29

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

0:35:290:35:34

It is enormous!

0:35:340:35:36

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

0:35:360:35:41

'That water park at the bottom of the garden

0:35:410:35:45

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

0:35:450:35:48

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

0:35:480:35:53

'How much does a local estate agent

0:35:530:35:56

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

0:35:560:36:00

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

0:36:000:36:06

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

0:36:060:36:12

and the kitchen knocking through into a kitchen diner.

0:36:120:36:16

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

0:36:160:36:24

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

0:36:240:36:29

'So could you make your money back?'

0:36:290:36:32

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

0:36:320:36:39

'If someone got it at guide price

0:36:390:36:41

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

0:36:410:36:49

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

0:36:490:36:54

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

0:36:540:36:58

There are other challenges.

0:36:580:37:00

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

0:37:000:37:05

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

0:37:050:37:10

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

0:37:100:37:14

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

0:37:140:37:18

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

0:37:210:37:25

Looking for 100,000.

0:37:250:37:28

Say 100? 100 here.

0:37:280:37:31

110? 110 there. 120?

0:37:310:37:34

130?

0:37:340:37:36

130, sir. 140?

0:37:360:37:38

Yes? 150?

0:37:380:37:41

150? No?

0:37:410:37:43

145, then?

0:37:430:37:45

Yes? 145. 150, sir?

0:37:450:37:47

No?

0:37:470:37:49

At £145,000, then.

0:37:490:37:52

Looking for 150.

0:37:520:37:54

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

0:37:540:38:00

147?

0:38:000:38:02

147. 148?

0:38:020:38:04

149?

0:38:040:38:06

Yes. 150?

0:38:060:38:09

150, I've got. Looking for 151.

0:38:090:38:12

151. 152? 153?

0:38:120:38:15

154? 155?

0:38:160:38:18

No? OK.

0:38:180:38:21

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

0:38:210:38:25

I'm looking for 155.

0:38:250:38:27

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

0:38:270:38:31

He's in at a half.

0:38:310:38:33

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

0:38:330:38:36

156? 156 and a half?

0:38:360:38:39

No? 156 at the back.

0:38:390:38:43

First time at 156,000.

0:38:430:38:46

Second time at £156,000...

0:38:460:38:50

BANGS GAVEL It's yours, sir.

0:38:500:38:53

'At just over the guide price,

0:38:530:38:55

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

0:38:550:38:59

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

0:38:590:39:05

'It's their second investment property,

0:39:050:39:08

'the first they intend to develop.

0:39:080:39:11

'I met up with Dave to find out

0:39:110:39:14

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

0:39:140:39:19

-So, Dave!

-Pleased to meet you.

-Why do you want to buy this place?

0:39:190:39:23

We went to the auction.

0:39:230:39:26

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

-Ooh.

0:39:260:39:32

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

0:39:320:39:37

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

0:39:370:39:41

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

0:39:410:39:45

-You bought a house you'd never seen.

-Yes.

-Had you checked the legal pack?

-Yes. We downloaded that.

0:39:450:39:52

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

0:39:520:39:56

-We didn't know the state of repair.

-Tsk! Tsk!

-I know!

0:39:560:40:00

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

0:40:000:40:05

In for a penny, in for a pound.

0:40:050:40:07

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

0:40:070:40:11

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

0:40:110:40:14

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

0:40:140:40:20

'That's before starting any repairs.

0:40:200:40:22

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

0:40:220:40:27

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

0:40:270:40:32

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

0:40:320:40:36

You set MY A-level maths questions?

0:40:360:40:40

-Possibly...

-I'll have words with you later!

0:40:400:40:43

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

0:40:430:40:48

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

-Oh.

0:40:480:40:53

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

0:40:530:40:57

-WHISPERS:

-Inside tip, there!

-Yeah.

0:40:570:40:59

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

0:40:590:41:03

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

0:41:030:41:07

'pay close attention to this next bit.'

0:41:070:41:10

The overall cost price is 160,000.

0:41:100:41:13

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

0:41:130:41:19

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

0:41:190:41:23

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

0:41:230:41:27

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

0:41:270:41:32

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

0:41:320:41:37

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

0:41:370:41:41

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

0:41:410:41:46

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

0:41:460:41:50

That is the extent of our expertise.

0:41:500:41:54

Who are you going to call in to help you?

0:41:540:41:57

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

0:41:570:42:00

He's going to arrange the people,

0:42:000:42:03

do the schedule and make sure the work is done.

0:42:030:42:07

-He is crucial to your success or failure.

-Absolutely.

0:42:070:42:10

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

0:42:100:42:15

-at a price that we think is reasonable.

-Yeah, OK.

0:42:150:42:20

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

0:42:200:42:23

'I hope his faith in his builder is justified.

0:42:230:42:26

'As well as that schedule of works,

0:42:260:42:29

'the guys agree that the bathroom should be relocated

0:42:290:42:33

'and the kitchen and rear room downstairs opened up.

0:42:330:42:37

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

0:42:370:42:41

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

0:42:410:42:46

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

0:42:460:42:51

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

0:42:510:42:56

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

0:42:560:43:00

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

0:43:000:43:04

We'll try to make them easier in future!

0:43:040:43:07

-I'm out of it!

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

0:43:070:43:13

-Congratulations and good luck.

-Thank you.

0:43:130:43:16

Lots of work to be done, then.

0:43:230:43:26

Have Dave and his colleagues done their sums?

0:43:260:43:30

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

0:43:300:43:34

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

0:43:340:43:40

Time moves on and hopefully work has progressed.

0:43:430:43:47

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

0:43:470:43:52

Let's go back and find out.

0:43:520:43:54

'Back to north London.

0:43:540:43:56

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

0:43:560:44:01

'feeling rotten and run down.

0:44:010:44:03

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

0:44:100:44:15

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

0:44:150:44:20

'might just bounce back.

0:44:200:44:23

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

0:44:230:44:27

'Have her finances sprung a leak?'

0:44:270:44:29

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

0:44:290:44:34

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

0:44:340:44:39

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

0:44:390:44:44

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

0:44:440:44:49

'To do it all in three weeks is miraculous.

0:44:490:44:52

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

0:44:520:44:56

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

0:44:560:45:01

'This is quite an achievement.

0:45:010:45:04

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

0:45:090:45:14

We had it completely taken out, resprayed and refloored.

0:45:140:45:19

Everything's fine now.

0:45:190:45:21

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

0:45:210:45:26

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

0:45:260:45:30

'the decision became easy.'

0:45:300:45:32

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

0:45:320:45:36

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

0:45:360:45:41

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

0:45:410:45:47

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

0:45:470:45:53

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

0:45:530:45:58

We removed it, thinking that was the problem.

0:45:580:46:01

It was actually a leaking roof. Had that sealed.

0:46:010:46:05

Ever since, we haven't had any problems.

0:46:050:46:08

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

0:46:110:46:16

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

0:46:160:46:20

'and those mushrooms above the door.

0:46:200:46:23

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

0:46:230:46:30

It's my first experience.

0:46:300:46:32

It was a success.

0:46:320:46:34

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

0:46:340:46:39

and spending 5,000 for completion.

0:46:390:46:42

I'm happy with the end result.

0:46:420:46:44

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

0:46:440:46:48

'I'm not surprised.

0:46:500:46:52

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

0:46:520:46:56

'for her £145,000 investment,

0:46:560:46:59

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

0:46:590:47:04

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

0:47:040:47:09

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

0:47:160:47:19

Very nice. It's neutral colours.

0:47:220:47:24

The improvements have been done to a high standard.

0:47:240:47:28

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

0:47:280:47:34

I don't know.

0:47:340:47:36

Considering the carpets,

0:47:360:47:38

I wouldn't say they were the most expensive.

0:47:380:47:42

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

0:47:420:47:46

that would be ideal for a rental market, yeah.

0:47:460:47:49

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

0:47:490:47:54

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

0:47:540:47:58

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

0:47:580:48:03

'Will she be getting the best rental income?

0:48:030:48:06

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

0:48:060:48:12

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

0:48:120:48:17

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

0:48:170:48:22

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

0:48:220:48:26

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

0:48:260:48:33

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

0:48:330:48:37

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

0:48:370:48:41

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

0:48:410:48:46

950, 975, thereabouts.

0:48:460:48:49

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

0:48:490:48:53

'I'm sure you are, Julia,

0:48:530:48:55

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

0:48:550:49:00

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

0:49:000:49:05

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

0:49:050:49:11

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

0:49:110:49:16

'The market is uncertain.

0:49:160:49:18

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

0:49:180:49:25

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

0:49:250:49:31

'Not bad for three weeks' work!'

0:49:310:49:34

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

0:49:340:49:39

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

0:49:390:49:45

The peak, 200, I was given the impression.

0:49:450:49:49

So, yeah. I'm happy.

0:49:490:49:52

'With two properties under her belt,

0:49:550:49:58

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

0:49:580:50:02

I'm hoping to continue the same as,

0:50:020:50:04

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

0:50:040:50:09

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

0:50:110:50:14

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

0:50:140:50:18

'turning property into profit is about understanding equations.

0:50:180:50:23

'Even though Dave and squash buddies Phil and Andy

0:50:230:50:27

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

0:50:270:50:31

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

0:50:310:50:36

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

0:50:360:50:39

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

0:50:390:50:43

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

0:50:430:50:49

'But has he messed up the maths?

0:50:490:50:51

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

0:50:510:50:56

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

0:50:560:51:02

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

0:51:050:51:09

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

0:51:090:51:13

'and reinforced the property.

0:51:130:51:16

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

0:51:160:51:20

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

0:51:200:51:22

We thought we could patch it up

0:51:220:51:25

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

0:51:250:51:30

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

0:51:300:51:35

So it didn't do anything at all.

0:51:350:51:38

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

0:51:380:51:44

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

0:51:440:51:50

This room is the biggest transformation.

0:51:500:51:54

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

0:51:540:51:58

There was a window there.

0:51:580:52:00

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

0:52:000:52:04

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

0:52:040:52:10

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

0:52:100:52:16

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

0:52:160:52:20

outside onto the decking, onto the garden.

0:52:200:52:23

It's brought the garden into the house.

0:52:230:52:26

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

0:52:260:52:32

'With views across the water and new decking,

0:52:320:52:35

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

0:52:350:52:39

'But what about the layout upstairs?'

0:52:390:52:43

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

0:52:440:52:50

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

0:52:500:52:56

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

0:52:560:53:01

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

0:53:010:53:06

Shower, heated towel rail

0:53:060:53:08

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

0:53:080:53:13

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

0:53:130:53:18

'What's been done about them?'

0:53:180:53:20

There's a specialist way of dealing with them.

0:53:200:53:24

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

0:53:240:53:29

Then it's bolted through, bringing everything together.

0:53:290:53:32

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

0:53:320:53:37

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

0:53:370:53:41

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

0:53:410:53:45

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

0:53:450:53:51

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

0:53:530:53:57

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

0:53:570:54:03

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

0:54:030:54:07

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

0:54:070:54:12

'contributed to those costs.

0:54:120:54:14

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

0:54:140:54:18

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

0:54:200:54:26

'We invited two estate agents

0:54:260:54:28

'to tell us what they think.'

0:54:280:54:31

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

0:54:310:54:35

And I do like the space available upstairs.

0:54:350:54:39

The third bedroom is a good size.

0:54:390:54:42

A large single, good for a family.

0:54:420:54:45

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

0:54:450:54:50

Views across the back. It's more traditional.

0:54:500:54:54

It's in a popular area as well.

0:54:540:54:57

'What valuations would the estate agents put on the place

0:54:570:55:01

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

0:55:010:55:05

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

0:55:050:55:10

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

0:55:100:55:14

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

0:55:140:55:20

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

0:55:200:55:24

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

0:55:240:55:28

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

0:55:280:55:34

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

0:55:340:55:40

'I hope they achieve what they're after.

0:55:400:55:43

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

0:55:430:55:48

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

0:55:480:55:52

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

0:55:520:55:56

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

0:55:560:56:02

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

0:56:020:56:07

On this, certainly not.

0:56:070:56:09

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

0:56:120:56:17

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

0:56:170:56:21

'This teacher has learned a few lessons here.'

0:56:210:56:25

Having done this in such a short space of time,

0:56:250:56:29

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

0:56:290:56:34

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

0:56:340:56:40

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

0:56:400:56:45

That's it for today.

0:56:480:56:50

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

0:56:500:56:55

-Join us next time on Homes Under The Hammer.

-We will see you then.

0:56:550:57:00

Subtitles by Red Bee Media Ltd

0:57:210:57:24

Martin Roberts and Lucy Alexander visit a three-bed auction opportunity in south Wales, a two-bed terrace in north London with something hiding in the woodwork and a semi with a large crack in Wigan.

All of these properties went to auction, and Martin and Lucy find out who bought them and what they paid when they went under the hammer.


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