Episode 61 Homes Under the Hammer

You don't need experience to buy at a property auction.

But you do have to do your research and have your finances in place.

And have the courage to just put up your hand and bid for your home under the hammer.

All sorts of properties make their way into the auction catalogues,

from commercial premises to magnificent mansions and cosy cottages.

Let's see what we found to feature on today's programme.

There's a property in Wales that would keep you fit without going to the gym.

What an incredible staircase. Very steep.

I get absolutely plastered in London.

The first thing you notice is that spectacular cornicing, that ceiling rose.

And in Watford, if you're a wine connoisseur, this is the place for you.

There's a massive cellar!

Chateau Watford Gap here we come.

All of these properties went to auction, and we'll find out who bought them and for how much

when they went under the hammer.

Today I'm in Barry, South Wales.

Allegedly, Sir Billy Butlin got his idea for his holiday camps

when he was staying in a bed-and-breakfast here.

More recently, of course, it's been the setting for the hit BBC TV show Gavin And Stacey.

The big question, of course, is when it comes to property, what's occurring?

The property I'm here to see is just a short walk from the centre of Barry,

so it gets a big tick in the location box. From the outside, it looks pretty good.

Three-bedroom mid-terrace, guide price was £65,000.

The roof and exterior walls are in good condition and there are new windows and doors.

So far, this property is ringing my bell.

DOORBELL CHIMES

Lovely! An old fashioned doorbell. How marvellous!

Wow! What an incredible staircase.

Very steep, but also quite long.

Not where you expect for a terraced house like this.

But I suddenly see what advantage that brings.

Look at the ceiling height in here.

Absolutely fantastic.

That immediately gives you a great sense of space.

What's through here?

They're a classic of their time, aren't they?

What it does, it leads through into the rear sitting room.

In here, you've got a loo and bathroom downstairs. Is it worth moving it upstairs?

Don't know, you'd have to look into the costings carefully.

Kitchen off the back there, but then... Look at this fireplace.

It's a classic.

Even using all their nine lives, this dated chimney doesn't stand a cat's chance of surviving.

Upstairs there are three bedrooms.

The new buyer would have the opportunity of converting one of the two smaller bedrooms

into an upstairs bathroom.

It would cost a bit, but it would be more in keeping with what people want these days.

One thing I've noticed about this house, it's got a lot of mirrors.

And right now, a lot of Martins, too.

As I wanted to reflect on this property for a moment, I headed for the garden.

At an auction guide price of just 65,000,

I think this three-bedroom house could be fantastic value for money.

Most of what needs doing is cosmetic, although there's some damp in the bathroom.

There's also a very useful garage space where you could house

your classic car, or just the clutter of everyday life.

So far, I think this property is a winner, but just in case the sun and

sea air have scrambled my senses, I invited a local estate agent round

for a reality check.

I think it's a good, sound, traditional

three-bedroom, mid-terrace property.

This house would need to have central heating, it probably would need to have the kitchen updated,

and complete redecoration throughout, including carpets.

I knew it. A bit of sun and sea, and I forget about the basic necessities

like a proper, modern central heating system!

New central heating will make a hefty dent in any renovation budget,

as will moving the bathroom upstairs.

And would that improvement really be worth it?

My recommendation would be to leave it as it is,

leave it as three bedrooms and leave the bathroom downstairs.

There's a saving there at least.

This house is in a great location in the town of Barry, with the train station just a short walk away.

It's only a 20-minute car journey to Cardiff,

so it's a property that will appeal to a wide variety of people.

But is the guide price of 65,000 good value for money?

Renovated, this property would probably go on the market for about £110,000.

So there's a huge potential for sale profit, even after a modest renovation.

But what about as a rental property?

£595 per calendar month.

That's a yield of at least 10% on the auction guide price, which makes it a mouth-watering opportunity.

If you think that all properties that go to auction are smelly, damp places that are really in a state,

here's something that proves that's not the case.

A house that you could basically move into as it is.

I'd be very careful about doing any kind of restorations on this.

Moving the bathroom upstairs? Don't think it's worth it.

I think it's just a smarten-up, possibly get rid of the fireplace,

apart from that, it's ready to rock and roll.

Let's see who bought it at the auction.

On to lot number 19 now, ladies and gentlemen.

Three-bedroom, mid-terrace house.

I'm going to go in straight on my reserve.

I have a proxy bid of £69,000.

At £69,000. At £69,000. 70, thank you.

At 70,000, at 70,000. My proxy bid is at 71.

At £71,000 for the proxy bid, at 71. 72 in the back.

Yeah, OK. That's 73 then, thank you.

At 73, the proxy bidder is out.

You're out in the middle.

74, at 74. 75, please, sir. I can see you.

At 75, at 75. 76. 76. Against you, sir, at 76.

77 can I? 77 I'm bid. At 77, against you standing in the back.

Your bid at 77,000. At £77,000, hold your catalogue up again.

At £77,000. There is my bid.

The gentleman in the blue open-necked shirt.

At 78,000, a half if you like. A half quickly.

At £78,000, the hammer's up and it's your bid, sir.

Make no mistake, you're out behind, are we all done?

At £78,000, a half quickly if you like.

At £78,000,

it's yours, sir. Thank you very much.

And the winning bidder is Ian.

He's a local businessman who's still relatively new to the auction rooms.

He bought it for £78,000.

That's a good price, so he needn't fear that he's been taken for a ride.

Mind you, he knows all about that sort of thing already.

# Welcome to the pleasure dome... #

-Barry Island Pleasure Park.

-What about it?

-Well, I own Barry Island pleasure park.

-Oh, wow!

How cool is that? Tell me about the pleasure park.

Does it have roller coasters and big wheels?

Yes, there's roller coasters on there. It's quite a good park.

Or it has been in its day.

But we need to redevelop it and get it under cover.

That's like the ultimate boy's toy, to own a pleasure park.

Do you have all your mates round when it's all closed?

You go and ride the roller coasters and stuff?

I have done in the past, but...

-..not these days, no.

-How long have you owned it for?

-About 15 years.

So from owning a pleasure park to property, why did you want to buy this place?

-I've got five daughters, but I've got two left at home.

-Right.

They'll be coming of age in the next couple of years,

so I think the time to get into the buy-to-let market is now.

-I've been visiting a few auctions recently, watching your programme...

-Great!

..and this one came up.

Rent it for a couple of years, then move the kids straight in.

Get them out of the house into their own?

-Yes.

-Are they happy to stay in the area?

Yeah, they like Barry.

So why this particular property?

I looked at four on the day that were in the auction,

and out of the four that I looked at, this was the one that I wanted.

I was just in the right place at the right time, if you like.

I'm very pleasantly surprised with how clean the property was when I walked through the door.

So tell me what you're going to do to it.

I think we're going to put central heating in, and, to be honest,

we're going to take down some of the wall, make this into a bigger living room.

So take down this dividing wall here?

Yeah. Get more light into it.

And obviously just decorate all the way through - change the wallpaper,

take down a bit of this lovely wood.

-And the fireplace?

-And the fireplace has got to go! We have got a home for the cats.

-You have?

-One of my daughters likes cats, she's not seen that yet.

You've got one more daughter to sort out - after that, are you going to build a portfolio, or is it purely

driven by the fact that you're buying them for your daughters?

No, it's not purely for the daughters -

it's something that I've been looking to get into for quite some time.

There's a few deals out there at the moment, interest rates

are very low, as we know - now's the time to buy the property.

If you can afford to sit on them for three, five years,

I think you'll be on an earner.

If, like Ian, you've got the cash, investing in buy-to-let can seem a great idea at the moment.

But who knows what might happen in the future.

It could be as bumpy a ride as one of his fairground attractions.

-So tell me how much you're going to spend.

-I think I'll be looking at around 10...10K.

What about timescale?

As quickly as possible. If I just go the renovation route,

I'll be looking at 12 weeks, on and off.

Thank you very much, good luck. I hope it all turns out well.

Maybe I'll see you down at the pleasure park.

No problem, you can always have a free band.

Really? Very kind of you, I'm off!

# ..Roller coaster Just got to ride it... #

I often say that property developing is a bit like a roller-coaster ride,

so Ian should be prepared for what might happen.

The big question, of course, is potential problems.

Will he "dodgem", or "waltzer" round them?

One thing for sure, he won't be "carou-selling" the property,

because it's going to go to his daughters.

I'm going to go back into my pun cave now - you can find out what happens later in the show.

# Oh, the times They are a changing... #

I'm in Lewisham, south-east London, to visit a Victorian property where time has not stood still.

For many years, Lewisham was a popular suburb of London, and these homes would have been built

for the wealthy, drawn here by improved transport links and the fresh air.

In fact, according to the 1911 census, this property here was occupied by a family of just four.

Today, the houses have nearly all been subdivided, and we're here

to see a one-bedroomed flat on the raised ground floor of this semi-detached house.

It had a guide price of just 120,000 quid.

'Even with the current housing recession, 120,000 for a London flat sounds a good deal.'

That communal area is a little bit disappointing.

On the inside, it's a bit tired.

But...wow! When you walk into this room, the first thing you notice

is that spectacular cornicing, that ceiling rose. That's actually taken my breath away.

You've got this big, big, voluminous room, high ceilings, this magnificent window area.

Look at this. Originally, this house would have had great big shutters either side.

To reinstate those would be amazing. This is a bit of a worry.

Not quite sure what it is, maybe a bit of a damp problem,

could be to do with something outside - the guttering, perhaps.

I'd certainly get that looked at.

And when you walk into the middle of the room,

that is your focal point - you've got a big chimney breast there.

I'd like to see a nice, big old fireplace reinstated.

I think that would look amazing. But you know what?

It's fantastic, isn't it? I love it.

# Bring me a higher love

# Bring me a higher love... #

For those of you who love high ceilings and elaborate plasterwork

as much as I do, this flat is pure heaven.

In the bedroom next door, the beautiful cornicing continues.

This room and next door's kitchen would originally have

been just one space, and the ceiling shows how it used to be.

The current decoration is not the most modern of colour schemes, but that can easily be changed,

and there's a lovely big window through which

Victorian courting couples would've exchanged love notes.

Compared to all the rooms in this flat, this one is the most disappointing.

It's really small in here and it's the kitchen.

Straightaway I can see it's just a bad layout.

I'd like to reorganise this space.

The boiler looks as though it may need replacing.

I don't think you could get a table and chairs in here, it'd be on the tight side, but you know what?

All you need to do is look at that window. It's beautiful.

Sadly the term "bathing beauty"

can't be used to describe the bathroom. This room single-handedly

destroys all my notions of romantic Victorians.

Instead of lavender water, I'm getting more of a "post-match muddy rugby player" vibe.

I think it's time for some air.

When you buy a flat, it's up to you to make the most of the inside, but what about the exterior?

That's often up to the freeholder, and I'd certainly be asking a few questions here.

First up - this, the rear garden.

Now, I'm aware it's shared between all the units, and it's a jungle

when it could be invaluable outside space.

I think it's outrageous, but why isn't it being maintained?

More alarmingly, the scaffolding. What's it doing there?!

Is there a leaky roof? Are they investigating a structural issue?

If there's a problem, then it's the leaseholders

who will have to fork out if the service charge doesn't cover it.

So when you're viewing property keep calm, use your eyes and ask

questions, or you could end up with an expensive mistake on your hands.

Vegetation apart, I'm still very impressed

with this one-bedroom flat, especially at that guide price of 120,000.

I asked a local estate agent to tell me more about the property

and the surrounding area.

This road is mainly made up of Victorian properties.

There are some big semi-detached

and detached houses on one side of the road.

It's got a very nice park across the road.

The nearest station is eight minutes' walk away.

It ticks all the boxes so far, but inside the flat there were

lots of things that needed attention. So how much would a renovation cost?

You wouldn't need to spend much more than 10, 12,000 on it.

Once renovated, how much could it go for?

You'd probably be talking somewhere around 185.

So for a total investment of around 130,000, you could be making 55 grand profit.

Is the rental potential just as tempting?

This property could achieve per calendar month £750 - £800.

That would give a rental yield of at least seven per cent, based on the guide price and renovation costs.

I think this flat is a little beauty. It's got charm and bags of character.

I'd certainly be doing some research into the freeholder situation

but as an investment or for a young first-time buyer, I think it's a fabulous lot.

Let's find out who went for it at auction.

It's a one-bedroom flat, needs modernisation.

Who'd like to give me a start on this? 100?

Bidding at the back? Thank you, 100 I've got.

Might be their lucky day.

100 for the first.

100 for the second. How much? 105? OK, 101.

102. 103.

104.

105. 106.

107. 108.

109. 110. 111.

112. 113. 114.

115. 116.

117. 118. 119. 120.

121.

122. 123. 124.

Have a think about it, it's with the lady here in the middle. £123,000 against you at the back.

Anybody else for Lot 85?

124 back in.

125. OK, 125. 126.

127. 128.

129.

130. 131.

One more? Have a think about it. It's with the lady in the middle. Anybody else?

130 for the first, 130 for the second.

130 for the third and final time. Are we all done?

Well done.

The winning bidder is Jo, seen here with her husband.

She's a beginner at property investing but has lived in the area for the last 16 years.

In fact, the flat she's bought is only two streets away from her home.

That's handy since she'll be doing most of the work.

Her stockbroker husband-cum-business partner is going to be taking

a hands-off approach to the wallpaper stripping and decorating.

# I've nothing much to offer

# I'm an absolute beginner. #

Jo, congratulations. You look so happy about this purchase.

-I am, I'm excited.

-Are you?

-I am.

But looking around coming back for the third time, the flat's in a state.

It's a lot worse than I thought it was.

I know it's just cosmetics but...

-I'm excited.

-How do you feel about the price?

Do you feel you may have paid over the top for it or is it a bargain?

I thought maybe it was a bit on the expensive side and then I spoke to

someone who said, "No, it's a good price."

Although it needs some work doing to it, it's a good price.

So what are you doing buying property in this climate?

A lot of people aren't out there buying property, they're a bit worried about what's going on.

They're waiting to see.

Initially we were thinking that we may let my brother have it, but then it worked out he works too far away

so it worked out, let's just buy it anyway and rent it out, so we're going to rent it out.

-What was it about the flat that you liked so much?

-The coving.

-THEY LAUGH

-It's gorgeous!

-The coving and the location,

and because we're so close to home, so now that we've decided to rent it out,

it's close if there are any issues and it's close to London by train, London by DLR.

The DLR station is down the road.

So how on top of this project are you going to be? Are you working at the moment?

No. I resigned from my job, not because we were thinking about buying a flat,

but just because I was unhappy at work so I spoke to my husband.

He said, "If it's making you that unhappy then resign".

Then this happened and I love decorating, so as of next Monday,

I'm going to be in here cleaning and decorating, so my husband's getting free labour!

There you are in the recession, resigning, become a property developer.

You're about to put you overalls on!

I'm helping Gordon Brown!

# I've got work to do I've got work, baby

# Got work to do... #

I think for the living room and the bedroom it's just cosmetics,

it's just going to need paint, new radiators, a good clean and we may put in some false fireplaces

so the rooms have got focal points and the kitchen and bathroom, need a new kitchen and bathroom.

Do you think you may have inherited any problems with it?

Looking around yesterday, maybe.

On the basis that if you look at the back garden and the communal areas,

it doesn't look like they're looked after.

Another thing that straight away sets alarm bells ringing in my ears is the scaffolding on the side.

What's that for?

When my husband and I came to look at it, we did think maybe it was one of the flats were having something done,

but we decided very late in the day that we were gonna buy so we didn't have time to have a survey done.

Let's keep our fingers crossed on that one.

One of the down-sides of buying at auction is that as the purchasing process is so speedy,

it's not always possible for buyers to check all relevant facts before bidding

so it's very much a case of buyer beware.

Still, on the positive front, there is still a lot of potential in this flat.

It's a travesty that you've got a London flat and nobody's using

that huge outside space that you've got there.

If, when we get round to sorting it out,

I think it will make a lovely addition to whomever wants to rent the flat.

-I hadn't realised how big the garden was.

-It goes right the way back.

If you look at the house two along, you can see the sections of the garden.

Each flat has got a really big section,

so you've got all of that to think about but that's more than just an overhaul.

-That really is a good few weeks' work.

-And a lot of money.

What sort of budget are you looking at for the work?

Initially we were saying 10,000 but hopefully half that.

Have you ever done anything like this before? Is this the first time for you?

-No, first time.

-Tell me your timescale for the work.

-A month.

-Is that realistic?

Who knows? I don't know.

So it's a very brave move to quit your job and buy property in a recession.

I think Jo's got a great flat here for a good price but she's got some serious investigating to do

and I reckon, get this garden sorted out and a good buy turns into a fantastic purchase.

Coming up - in Watford, Cupid's shot his arrow and it's true romance.

I love this flat.

In London, there's a new recruit to the army of white van drivers.

I hired a white van and I drove all the way up to Wolverhampton on my own.

It was brilliant, it was like a mini adventure.

But first, back to Ian.

Has he finally got his daughters out of his house?

They haven't come down and seen it. I don't think they're interested.

We're returning to the Welsh seaside town of Barry

to see how local businessman Ian is doing with the three-bedroomed house

he bought at auction for 78,000.

He purchased it as both a buy-to-let investment and a starter home for one of his five daughters.

We all know property investing can be a helter-skelter experience,

but Ian might be better equipped than most of us to handle that.

-Barry Island Pleasure Park.

-What about it?

Well, I own Barry Island Pleasure Park.

Oh, wow. How cool is that? Tell me about the pleasure park.

Roller coasters, big wheels?

Yeah, there's a roller coaster on there. It's quite a good park.

# Life is a roller coaster Just gotta ride it... #

Ian is relatively new to property investment.

So, how will he have done with the renovation?

Let's find out when we return four months later.

When we first met Ian, he was planning to do up the property

and probably rent it out until his daughter was ready to take it on.

Inside, it all looked really good.

It all appears homely and ready to be lived in. In fact, hold on... It seems very lived-in.

What's happened, I had big intentions of turning the whole property around.

In actual fact, because of the Barry Island Pleasure Park, I'd been so involved with getting

that sorted out for the season that I really didn't have any time to deal with the property myself.

So really, in a nutshell, as it happens, a friend of mine was looking for a house.

I was in the pub and I said, "How's your daughter and son-in-law getting on?"

They said, "Oh, they're living with us.

"They're looking for a property, but they can't find one."

I said, "As it happens, I've got a property.

"There's a deal to be done if you're interested, if you want to get them out your hair."

It's ironic that Ian, who bought the property so he could get one of his own daughters out of his hair

and living elsewhere, should be helping a friend to do the same.

But it's been a godsend for his three new tenants -

Natasha, Gareth and their four-month-old baby boy, Harley.

They're now thoroughly enjoying their independent family life,

but did have to make a contribution.

They had a deal on the rental of the property.

But, in turn, they did the interior decorating.

Because they were going to live in the property, I thought they might as well put it to their liking.

So, all the renovation was done and paid for by Natasha and Gareth.

And it looks like they've done a great job.

OK, in one of the bedrooms upstairs, the new decor can't be said to appeal to a wide variety of people.

But Junior likes it, so who cares?

This is the first time I've seen the property since the new tenants moved in.

I'm pleasantly surprised with what they've done, to be honest.

The chimney breast was probably the...baddest thing about the property.

But they've taken that out,

and it's looking all right. One of the reasons why I was

very happy to have bought this property was the actual kitchen.

As you can see, it's scrubbed up really well.

And I don't think, to be honest, that there's anything new in here.

It just looks so clean and tidy.

Yeah, very, very good. Very, very pleased.

Financially, it's worked out very well for me, apart from the central heating, that I've paid for.

They're just going to rent the property now for the foreseeable future.

I'm quite happy for the next few years just to sit on the property until my daughter comes of age.

The last area that needs looking at is the garden.

Again, the tenants have done good work, but it's here the landlord Ian has laid down one small condition.

I had some potatoes at home.

The deal was they could have the property as long as they plant the potatoes and I have half the crop.

They've actually done that in the garden.

I can't see any shoots at the moment, but they've taken the greenhouse

down and they've put the little patio there.

Yeah, it's looking quite smart.

Talking about small potatoes, Ian's renovation must have come in

well under budget, because he saved on materials and trades people.

My budget so far has been around...

4K, really.

This raises the question of whether Ian has made a profit on his property investment.

The best people to answer this are two local estate agents.

What do they think of Ian's renovation, courtesy of Natasha and Gareth?

The property has transformed quite considerably, to be honest.

In particular the bathroom.

The kitchen is absolutely superb. People love white kitchens.

I don't believe this property needed a higher standard of improvement.

What has been done has been very simple, but very straightforward.

A good reaction, there.

But what effect will it have on the current price?

-It's yours, sir. Thank you very much.

-Ian bought the property for 78,000,

plus the usual costs and expenses.

With his tenants' help, he's only spent £4,000 on the renovation,

making a grand total of around £82,000.

How much do the estate agents think it's now worth?

90,000 to 95,000.

Round about 92,000, as an asking price.

So, that's a pre-tax profit of at least £8,000, and Ian is happy.

There's a little bit of a profit there from day one.

It's only going to get better as time goes by.

Of course, for Ian, this house is a long-term investment.

He's planning on renting it out as well as letting it to one of his daughters in the future.

So, how much could it make as a rental property?

Between £550 and £575 per calendar month.

550 per calendar month.

I knew it was around 550, 575.

So, the tenants that are in here I'm very happy with.

They've had a deal, and I'm happy.

One thing that I have noticed about getting into the property game is you do need time.

And I'm already working eight days a week!

But, yeah, as and when the opportunities come up, properties

around the right money, I'll get the deposit together and keep purchasing.

I'm just south of Watford in Oxhey, where there's a lot

that was up for auction that seemed to suit all needs.

Ground-floor shop, two-bedroom maisonette and office space, all had a guide price for 290,000 quid.

Now, if you're thinking, "Oh, how terribly convenient.

"I'll run the shop, I'll live in the maisonette and I'll work from the office."

You can't. Cos the shop's already got a ten-year lease on it.

But let's look round the rest of the property.

'The flat and the office can be found through this pretty courtyard, complete with parking space.

'So far, everything's looking neat and tidy.'

It's a pretty impressive start, I have to say. The stairway there, totally renovated.

And...wow, look at this!

I feel like I've been catapulted forward in time by three months,

like the property has already been refurbished. It's beautiful!

Look at this bathroom! Nice towel rail, nice fittings. Gorgeous!

New paint everywhere.

Wow! Look at this kitchen! I love the high ceilings. Very trendy units.

It's got a marble work surface.

Absolutely fantastic. What a start!

I have to say, this is one of the best-maintained auction properties

I've ever seen on Homes Under the Hammer.

Everything just reeks of quality.

There are two spacious bedrooms, both of them complete with a walk-in wardrobes.

And another welcome surprise - there's a shower room, complete with basin and WC.

Two bathrooms is very much what buyers or renters want these days,

so I can see this place being an instant hit.

And it gets better.

I would not have anticipated this, looking at this flat from the outside.

What a room! Look at this window!

I mean, it's a shame it's not looking out across the Serengeti.

But it's still fantastic.

A beautiful, big, light, airy space. I love this flat.

And it doesn't stop there. For that £290,000 guide price,

you also get two other valuable assets.

And the first one is directly beneath the shop.

Well, so far, perfect project for an armchair investor.

But down here, there is a massive cellar.

Look. So this is a chance for you to get your hands dirty.

Great news - it's got no damp and this wonderful ceiling height.

So I would be looking at converting this into a bedroom, perhaps, maybe a games room.

The opportunities are endless.

And in terms of investment, money you spend on here will

easily be returned on the value of the property.

That leaves one final piece in the jigsaw - last but not least, it's this!

This little office is a real bonus to the whole offering.

It's not huge, but you're not gonna believe the amount you could get in rent for it.

Let me just tell you what it is first.

You've got a little kitchen area there and a loo. And then this one area.

The thing is, there's a shortage of this kind of small office space in this area.

So believe it or not, you could get £400 a month for this place alone.

Wow! Added bonus!

So there you have it.

A shop which will produce an income for the next 10 years.

A superb two-bedroomed flat, a very handy cellar space,

and a self-contained office, all for a guide price of £290,000.

It's an absolute bargain. Oh, and I forgot to mention, there's some handy car parking space as well.

All I need to know now is a bit about the area.

So I asked a local estate agent to tell me more.

We're actually in Oxhey Village, which is a suburb of Watford.

It's a very popular area.

It's mainly Victorian housing.

People would want to live here because of access to the railway station. It's very convenient

for the motorway. And it's a nice place to live.

That's great news. Now I have to say, this two-bedroom flat is in immaculate condition.

So, why is that?

The owner was living in the flat, which is why it's got

a much better standard than you might expect to see on a normal auction property.

With this property, there's very little to renovate, just the office and possibly the cellar.

Would renovating the latter make good financial sense?

I'd value the flat at £200,000.

If the cellar is converted, potentially, you're looking at £235,000 for the whole thing.

That's a potential gain of £35,000.

But to renovate the cellar would be expensive, with problems of tanking and airflow.

Still, everything else suggests

that if the price is right, buying this property would be very good business.

The shop at the moment is producing £11,500 a year.

The flat will rent for at least £1,000 a month, so that's another £12,000 a year.

If the office is converted, that ought to produce about £100 a week.

So that's an extra £5,000.

Those rental figures would produce a yield of nearly 10% on the auction guide price.

And it gets better still.

Based on current mortgage rates, I think that the shop income would probably pay the mortgage

for the whole property. It's a fantastic return.

Well, there's one phrase that springs to mind with this one, and that's no-brainer.

You've got the shop that's already rented out,

this maisonette which is beautiful, doesn't need any work. You've got the added potential of the office.

And then, for the future, convert the cellar, and add even more value.

It really is a fantastic opportunity. Let's see who's spotted it at the auction.

Would you start me maybe at 250 on this one?

At 250 somewhere? 250?

Thank you, sir. Straight in at 250. At 260?

Thank you very much, sir. 260.

270 may I say? Yes, 270. 280, then?

275, then? 275. 280.

280. 285? Yes? 285.

290, then? No. OK, it's 285,000.

290, I'll take it there. Gentleman over there. Three people bidding, to my left-hand side,

standing by the door at the back. In the market now at £290,000.

291. 292? 292. 293.

293. 294? 294. 295? 295.

296? 296. 297?

You can't say no!

So, at £296,000... 297? Have a think about it.

297?

296-and-a-half? OK, then. So, £296,000 at the back of the room.

296-and-a-half anywhere else? Otherwise we're selling at £296,000.

I'm keeping my eye on you. But I'm selling to you. So, £296,000, for the first time,

for the second time... 296-and-a-half. 297?

They're discussing it. Exciting. 297? 297.

297-and-a-half? He says no this time.

I'll keep my eye on you, in case you come back. So £297,000, to the two gentlemen standing at the back,

for the first time, second time,

and the third and final time, at £297,000. Sold. Well done, thank you very much.

Thank you to the under bidder, there.

But who is the mysterious buyer at the back?

His name is Tony, and he's a 27-year-old local to the area.

Now, what's with the dramatic music, you may be wondering?

Well, it turns out that Tony has an exciting, globe-trotting job, which you'll find out about later.

Tony, congratulations. This is a great property, isn't it?

Yeah, really excited with it.

I didn't expect to get it really at the auction.

It was more of a case of just going along to have a look. No, it's brilliant. Really happy with it.

What did you know of the property before you bought it?

Quite a bit. Basically my brother lives just through that wall.

-Really?!

-I'd actually just come back from a job.

I work abroad. And I was just sitting in his living room, and I looked up, and I'd seen it was at auction.

And we started discussing it.

And then to see it at auction, I thought, "Might as well have a look, and see what's happening with it."

Obviously, I'd done some research into it, and got the legal pack and had a little look through.

-But really, really happy with it.

-So, why did you want to buy it?

Just from looking at the guide price and looking at the rental income from it.

Just thought it was too good to be true, really.

So tell me more about you, what do you do?

I work offshore with underwater vehicles. Like underwater robots.

Basically a lot of the time it's for like a telecommunications company -

laying and maintaining fibre-optic cable networks.

-It sounds like something out of Thunderbirds.

-Yeah, it's a bit odd.

The good thing is, I do about six months a year.

Obviously, get quite a few holidays in,

try and do snowboarding in the winter, and beach life in the summer.

-THUNDERBIRDS INTRO:

-Five... Four...

Three...

So a world of scuba-diving, robots and underwater vehicles,

with six months off throughout the year in which to go snowboarding and sunbathing. It's a tough job!

But I suppose someone has to do it. Still, he now has the mission

of maximising his investment. So, it's a case of F-A-B, Tony!

So, tell me what you're gonna do.

Obviously, the shop looks after itself. The flat,

I've got somebody that wants to move in.

Gonna lease that out for £1,000 a month.

-Wow!

-There's work to do in the office,

which is a nice little project, which I'm gonna try and maybe take up next time I come back from work.

Just while I'm away, get things ticking over.

Now, a big bonus, this place has a cellar. Shall we go and have a look?

-Yeah, definitely.

-Come on, after you.

Well, you could definitely have some fun down here, couldn't you?

-Yeah, definitely. It was a bit of a find, really.

-So, do you have any idea what you're gonna do down here?

-At the moment, erm, thinking of maybe hanging a punchbag up.

-A punchbag?!

And put a bit of gym equipment down. And it's a bit of a storage area.

I wasn't sure what you're allowed to do with it cos there's no light, and no natural ventilation.

I mean, you can get all sorts of things, like light tubes and ways of getting natural light down here.

-But the thing to do is to get a builder...

-Yeah, get somebody in that knows a bit more than I do.

As I say, it was just a bit of a find, really.

Bought the place, came down, had a look, and was like...

So you didn't know this was down here when you bought it?

I didn't realise it was quite as big as it was.

Cos I just, erm, had seen some pictures, and it was just the small area.

So what's the timescale for working on this bit?

Just leave it as a project. Just keep myself busy

when I'm back from work. If I wanted to do something, it could be like over six months, a year...

-And it's just something to add on to the property.

-Good luck with it all.

Excellent, thanks very much. Cheers!

Tony has got the exciting prospect of renovating the cellar, and sorting out that office.

How is he gonna get on?

Find out later in the show.

Time is the enemy when property developing.

Every day you go over your schedule, it adds to your budget.

-So did our buyers' timescales go adrift, or did they stay on track and on budget?

-Let's find out.

We're back in Lewisham, southeast London, to see how absolute beginner

Jo is doing with her first steps in the property investment world.

She and her husband bought this one-bedroom Victorian flat for £130,000, intending to rent it out.

Renovations for the inexperienced are usually fraught and worrying affairs.

But Jo was approaching the whole thing with carefree optimism.

-Have you ever done anything like this before?

-No, first time.

-How d'you think you'll be as a project manager?

-Oh, it's a friend of ours, so it's only him and me.

And beyond us getting on each other's nerves, cos he talks a lot and I talk a lot, I think we'll be fine!

-So tell me your timescale for the work.

-A month.

-Is that realistic?

Who knows? I don't know!

It did take Jo longer - because we're returning three months later.

Let's find out how she's done.

Well, if Jo has been stressed during the renovation, she's certainly not showing it.

First stop, the reception room. This had a beautiful high plasterwork ceiling that I just loved.

But there was a less-than-beautiful damp patch near the window that frankly I could have done without.

But now, just look at it.

A modern, stylish room, decorated in keeping with its Victorian heritage,

with plush, chocolate-coloured curtains, that give real elegance to the room.

Meanwhile, next door, the neutral colour scheme continues.

When we bought this flat, we decided that because it's a beautiful period building,

that what was missing in the flat were fireplaces.

I bought this off the internet, and it's the real deal.

We bought this one and bought the one in the living room from the same people.

I think it definitely adds value to the flat.

They're beautiful, I think they're great.

Talking of firepower, if ever there was somewhere in need of some, it was this drab bathroom.

But Jo has worked her magic and created a warm and cheerful room, worthy of a long, relaxing soak.

Now, the kitchen, we've spent the most amount of money on. Considering the size of the kitchen,

we bought white goods, and we spent about four grand. But I think it's money well spent.

The only problem with all the flat is the garden. That's the only thing that's still outstanding.

It's a jungle, all right! The back garden,

which belongs to all the flats in the building, has grown even wilder!

When Jo first bought the flat, there was a question mark over who was responsible

for maintaining it, and why that wasn't being done.

And it seems as though they haven't made much progress with getting an answer.

Been talking to the landlord, and we had a result.

And they've said that yes, it does need doing

cos it's now so overgrown that you could lose a mid-sized person in the garden.

They're sending in contractors and they're coming next week.

And then going forward, we will discuss with

the other three tenants who's gonna pick up the maintenance charge. The scaffolding,

it's not that it's up there because the house is falling down. Apparently it's been there for over two years.

So someone's just forgotten that they've put it up.

The freehold owners are going to sort it out.

But this apart, the renovation has gone very smoothly.

You would imagine that when you rip bathrooms and kitchens out, you're gonna unearth something.

But nothing, touch wood,

other than pipework and bits and pieces. But, for the most, it's been really, really easy.

Part of the reason for the success is that Jo worked

with just one builder, and they were able to keep a watchful eye on quality control.

In fact, it was only when other people got involved that problems seemed to occur.

My husband was thinking about putting furniture into the flat, when we decided we were gonna rent it.

And he was saying that he wanted to put in a new TV, a plasma TV.

And I was like, "No, that's just a waste of money. He turned round and said, "No, what we could do is,

"we could put our TV in there and we could buy a new one!" I was like, "Right. No, it's not gonna happen!"

It looks like Jo has been in control of all her renovation costs.

So how has her budget fared?

Initially we set £10,000, and it came out to around 10-and-a-half.

So that's not bad, considering it was our first piece of work.

On budget and to a high standard.

The only thing missing now is some feedback from two local estate agents.

What do they think of the renovation?

The flat itself is far better, it's in incredible condition.

They've done a real good job of refurbishing it.

The property's spacious. It's got high ceilings and good proportions.

There's no real negatives I can pick up on in the property.

I think it will be well received on the market.

It's top marks for Jo and her builder.

But the big question is, how much is it now worth?

Jo bought the one-bedroom flat for £130,000, plus the usual costs and expenses.

She spent £10,500 renovating it, so that's a grand total of £140,500.

So how much do the agents think it's now worth?

Something up to about 180, as an asking price.

I would market the property at around 190,000, and hope to achieve offers around 180.

We were expecting 180. So, not overly happy, not unhappy.

Jo may sound a bit underwhelmed by the estimated price.

But in fact, that's a pre-tax profit of almost £39,500.

Most people would think that's a very good return!

Still, Jo has always had plans to make this a rental property.

So how much could that achieve?

-£750 per calendar month.

-Between £750 and £800 a month.

Rented out, with the local estate agent, at 850.

Overall, I think the experience has been a very positive one.

For the future, if we come across another property that we like,

and we think that we can get it at a good price at auction, then we may do that. But we'll see.

It's back to Watford now, to see how Tony's doing with the property he bought at auction.

-Although

-doing

-may not be the right word, since there was very little that needed

-doing.

He bought a shop that was already let, and an immaculate two-bedroomed flat.

With the income from the shop alone likely to cover his mortgage payments, it was a case of...

# Nice and easy does it every time! #

OK, he did have one or two jobs to do, because also included in the auction lot

was a small office in need of modernisation,

and a large cellar with endless development possibilities.

Let's see what Tony has decided to do, when we return seven months later.

And here comes 27-year-old Tony.

He often works abroad, laying communication cables

under water, with the help of submarines and robots.

Let's see exactly what he has done here, starting with the office.

And...it's a huge improvement.

OK, well, erm, this is the only bit of the property that we've changed.

Basically, there was horrible sort of wood on the walls, panelling, which we ripped off,

which gave us this brickwork, which we've had repointed. It just gives it quite a nice feel.

There was a false ceiling, which needed pulling down either way.

Basically just opened it up. It was easier just to board it off.

And it made the space a lot more open.

Put a new little kitchenette in and toilet.

So it's a nice, clean, usable space now.

Tony did a great job with the office but what about the cavernous cellar?

Did he manage to renovate it to its full potential?

Yeah, as you can see, not a great deal's happened down here. I managed to get my weights in, though.

And finally got my punchbag up.

Well, it's not quite the renovation we were hoping for.

Weights, a punchbag, and golf clubs.

Plastered walls and light vents was more in keeping with our expectations.

But let's give Tony a sporting chance here, as his work takes him away from home a lot.

So how has he done with renting out the upstairs flat?

Originally, the spacious two-bedroomed property

was in showroom condition, so surely he shouldn't have had any problems here.

Well, there are signs of life.

It looks like the flat has been rented out.

I had some friends coming over from America who planned to stay two or three months.

And I knew somebody else that wanted to rent a room.

They've gone back now.

The short-term rent is up. And then we'll see

if the current tenant wants to take the whole property over,

or I'll speak to some agents with regard to the office and then here.

So the top floor is now earning Tony money.

But why did he not develop the basement in order to maximise his return?

I think there is potential at some point in my life to develop it.

But at the moment, I just haven't got the time.

I think if I had the money to spend on a project like that, I'd rather invest it in another property.

Putting the question of the cellar on hold, Tony still has another problem.

As he works abroad for long periods of time,

how will he be able to run this diverse and intricate property venture?

My brother, he's been quite handy.

He actually lives very close and he's been helping us

with the project. The guys we've had in for plastering and pointing, he's arranged that.

And I think, with regards to the rent and stuff like that,

he's gonna look after this property and any future properties I'm interested in, so...

Without any shadow of a doubt, this has been a success for Tony.

The only question remaining is, how much of a success?

Two local estate agents are on hand to answer exactly that.

What do they think of what Tony has done so far?

Very minimal changes to the property. The only thing that's been done

is the office. And the work that's been done there is excellent.

We had this property on the market for £300,000 18 months ago,

just for this flat.

And the fact that he's now bought it for £297,000 for the whole lot is a fantastic deal.

OK, calculator time. Tony bought the combined property for 297 grand

plus the usual costs and expenses.

He has spent around £2,000 renovating the office.

How much do the estate agents think it is now worth?

I would value the flat at £225,000.

Add the shop into that at £150,000, showing an 8% yield.

If they rent the office for £100 a week, potentially another £50,000.

I think that this development would be worth around £450,000 in the current market.

So they think the property is currently worth between £425,000 and £450,000.

That could be a pre-tax profit for Tony of at least 126 grand. Wow!

You can't fault it, can you? It's been brilliant. So if I can find

another one like this, I'll definitely be going for it.

That's all we have time for on Homes Under The Hammer.

But do join us next time for more news from the trenches of the property battlefield.

-We'll see you then.

-Goodbye.

-Goodbye.

For more information about Homes Under The Hammer,

including how the programme was made,

visit the website at bbc.co.uk

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