Episode 71 Homes Under the Hammer

In a challenging housing market it's more important than ever to buy in the right location.

Buying a property in the right place will make it easier to sell and rent out.

Because there are property auctions held all around the country,

the chances are you'll find your home under the hammer.

As we know, buying property

can be one of the most stressful things you do.

And it's important not to underestimate

the amount of pressure and problem solving that's involved.

So, can our buyers take the strain?

Let's find out.

Coming up, there's a property to get your teeth into in The Potteries.

This is your property fodder.

It is a two bedroom mid-terrace.

There's something missing from this three-bed house in Gosport, Hampshire.

If you look out here, well, basically, there's no roof.

And I'm worried about the back bedroom of the semi-detached in Leeds.

Oh, dear.

All these properties have been sold at auction.

We'll find out who bought them and what they paid for them

when they went under the hammer.

Well, you'd have to have been living on a different planet

not to know that property prices have gone through some sticky times recently,

and it's no different here in Stoke where last year they dropped by 13%.

However, in the good old days of 2005,

he average terraced house was going up a massive £700 a week.

Now, the key is to spot when that is about to happen again.

And that's the problem -

barring a crystal ball, how do you second guess the property market?

Well, the answer may well be found here in The Potteries.

I'm in Fenton, to see the kind of property

that I think acts as a real barometer

to the British housing market in general.

This is your property fodder.

It is a two-bedroom mid-terrace.

It had a guide price of 35,000 quid,

but what did it sell for at a recent auction?

I'll tell you later. Let's go and have a look round first.

Outside this place looks to be in pretty good nick.

It's already double-glazed, which should save a bob or two,

but I'm guessing there's more to do inside.

Well, I guess you're not going to expect anything too spectacular

or different from any other two-bedroom terrace and,

you know what? You'd be absolutely right.

But that's one of the great things about them,

you know what you're going to get.

This one, on the face of it, it doesn't smell bad,

reasonable sized ceiling height.

It's got a gas fire which obviously needs replacing,

but overall, yep, pretty much as I predicted.

It's got a few nice original features.

I'd certainly take some time to do things like open up the fireplace

because that would be lovely as a central feature

of this rear room here. I mean, look at the floor.

I don't know if it's possible to get that sorted out,

but it's quarry tiles, they would actually be quite pleasant.

It's not a bad sized rear room.

You've got the stairs to your bedrooms there

and through into the kitchen.

Built in an extension on the back, it's not a bad sized space.

Classic kind of layout there.

You've got the loo and the bathroom out through the kitchen there.

Not ideal, but actually pretty much what people expect from a property like this,

so probably not worth the expense of moving it.

All in all, it does what it's supposed to do.

And, whilst we're talking about original features,

there are some lovely high skirting boards here

along with original coving and cornice.

Upstairs there are two decent sized bedrooms,

one at the back and one at the front.

At the rear, this lovely cobbled alleyway leads to off-street parking.

What does a local estate agent make of this as a potential investment?

In terms of renovating the property,

taking into account new kitchen, new bathroom, rewire,

I would imagine you need to spend

somewhere in the region of 10,000 to 12,000

to get it to the standard that we'd want it to be

and I think what you would do is make the best of the layout as it is.

I don't think there's any scope for changing this layout.

If you picked this up for around the £35,000 guide price,

then with the £10,000 to £12,000 renovation costs,

this could make a very worthwhile investment.

Once the renovations are done on this property,

the potential marketing figure at the moment

would probably be round about 69,950 as an asking price.

I would anticipate it being more an option for an investor to rent out in the short term.

With a contemporary gloss on it, I would expect it to be doing

£425 per calendar month easily, possibly a little more.

And that could mean a 10% rental return.

So, a perfectly respectable solid little house

that would make a great home or a good rental investment.

Now, remember, I think this is a barometer of UK property prices

and activity at the auctions in particular.

It had a guide price of 35,000 quid.

What happened when it went under the hammer?

Lot 37 is Turley Street or Tiley Street in Fenton.

30, are you going to say? 30, I'm bid in the middle.

Thank you. At £30,000. 35 can I say now?

35 against the wall. 40.

45 against the wall?

Take one off you.

At £40,000. 41.

42 is it now? New bidder front row.

£42,000. 43. 44.

44 and a half. 45. Another half?

45 and a half. 46. And a half.

47.

Where, where, where?

By the curtain, there we go. 47 and a half.

48.

At 48,000. 48 and a half. Yeah.

49. 49 and a half.

50.

50. And a half.

No? At 50,500 then.

A new bidder right at the back. 51.

51 and a half. 52. 52 and a half. 53?

Shaking his head. 52 and a half. Still with you, sir.

At 52,500 then first time.

52,500. He's back in. 53. And a half.

Definite? 53 and a half then.

Bid's here. At 53,500 the first time.

53,500, second time. Third.

54 in the aisle. 54 and a half.

55 it'll cost you now.

No. That was short and sweet.

£54,500, then. Left still at 54,500.

Are we all done? First time.

Second time. Third and final time at 54,500.

All done? 54,500.

Well done, you bought it.

There was a lot of interest in this one and for 54,500,

nearly £20,000 over the guide price,

the determined winning bidder was Kevin.

He owns a heating and ventilation company,

but has been investing in property for some time.

His eldest son, Dan, will be joining him on this project.

I met up with them at the house.

Kevin, Dan, lovely to meet you both. Congratulations!

-So, why did you pick this property?

-Location. Good location.

The house itself has got a lot of character.

You know, original features.

I like the block, there's only a few houses in the block.

It's more of a cottage to me than a terraced house, you know?

So, that's a nice benefit.

And every house in this little block,

both sides is really well kept, you know?

And I want to make this one of them.

-So, tell me about you two, then.

-Yeah, well, this is Dan, my lad.

He's 20, yeah?

I started in business, not building business, not property business,

-20 years ago, the week he was born.

-Oh, wow!

Not a good time to start, really,

but things have went successful or have gone successful

and Dan started in the business now what, 18 month...

Yeah, about two years. I left college and then he said,

"You know, you've got to find something to do,"

so I went with him and he said "See what you enjoy,"

See what I was enjoying, and went on and did a course in joinery and stuff and now we're in it and...

So, is the idea that you're going to work together on projects?

Well, if he pulls his finger out and performs, yeah.

Kevin obviously has high expectations of his eldest son, Dan.

With youngest son, Matt, also lined up to help

and Mum doing the bookkeeping, this renovation is a real family affair.

So, Dan, give me an idea of what you're going to do to this place?

I'll probably come in, you know,

get all the bulk of it out, all the carpets, all the messy stuff first.

Probably start stripping the walls down.

Basically, give it a good gut first before we start doing anything.

Get all the messy stuff out of the way.

This floor'll have to come up cos it's got no damp course.

-These tiles, as you can probably see, the...

-Lovely.

-£1.50 each.

-Are they?

Reclamation yard, yeah.

So you're going to take them up and sell them on?

No, what I'm hoping to do is open the chimney breast out,

make them a feature, and then we'll reuse the quarry tiles in the hearth.

-Oh!

-We'll try and reuse the stuff in the house if we can.

The main thing is the kitchen and the bathroom and then...

It'll be a good house. It will be replastered when this chip...

The chip paper comes off, if Dan gets there.

Very kind of you to give him that job!

One of the worst jobs in the world, scraping off woodchip!

-There is wood in it, he is a joiner!

-That's a bit of a tenuous...

Dan definitely drew the short straw here,

but he says he's up for the challenge

and it's good to know that Kevin plans to make the most of the character of this place.

They've set themselves an £8,000 to £10,000 budget and,

at the moment, they're planning to rent it out,

but it all depends on the state of the market when the work is complete.

-What's the timescale for doing the work?

-If all goes to plan, and I'm looking at Dan here!

If all goes to plan and my main business is a bit quieter and we can concentrate on this,

we could do this in two month, easily.

To be honest, probably six week.

-So, Dan, what do you think of that timescale?

-Yeah, I think...

I mean, we'll get it in time easy. You know, just work hard at it.

If we just crack on it we're here for a good couple of weeks, yeah, we'll be easily...

Good luck to you both and I hope it turns out well

and especially good luck with getting the wood chip off!

-I'm going to go at it!

-Yeah.

-Nice, neat lines will be here when you come back.

-I can't wait to see it.

So, there you have it, the auction rooms are buzzing once again and

properties are surpassing their reserve prices.

In terms of this one, well, Kevin and Dan,

I think they've got the experience to make it happen,

but I'm not sure that Kevin is going to be

quite the relaxed taskmaster that Dan's expecting,

and he's got all that woodchip to get off!

How's he going to get on? You can find out later in the show.

This is Gosport in Hampshire.

Now, the town overlooks Portsmouth, which is just across the harbour

and, as you can see behind me, there's the Spinnaker Tower which is Portsmouth's famous landmark.

Now, until the last quarter of the 20th century,

this area was a major naval and military centre.

Well, I'm here to see a property today, it's just around the corner

and it's only half a mile from the town centre.

Although Gosport doesn't have its own railway station,

it does have good schools and a regular ferry service across the harbour to Portsmouth.

Access to London and the rest of the country is easy.

I'm here to see this three-bed mid-terrace

which had a guide price of just 70,000 to 75,000.

Now, that's pretty good value for a property around here,

but there is a reason for that.

Now, the catalogue says this place needs "A full programme of refurbishment".

Well, a lot of auction properties usually do, but I've been told that I might need a hard hat.

Very ominous. I'm going in!

It does look a bit tatty and run down from the outside, it's on a busy main road,

but I haven't seen enough to explain that low guide price yet.

There's literally years worth of mail in this hallway, it's just

completely and utterly littered, and it's really run down inside.

Now, I don't know about a hard hat, though.

You can see all the old furniture's been left by the previous occupant.

There's a big hole over there in the ceiling by the bay window.

So, you know, it needs some care and attention,

but once you get the skip outside

and you completely clear this place out,

dump it all in there, give it a clean,

it will look like a completely different house.

It does need a lot of TLC.

Now, this kitchen looks like it hasn't been touched in years.

It's quite surprising because if you look over here

you can see the washing machine has dropped into the ground.

The tiles are all coming off.

Ah-ha!

Now I know why the hard hat was mentioned,

because if you look out here,

well, basically, there's no roof on this extension out the back.

You can see the sky, you can see daylight,

it has just collapsed and, look, there it is.

And that is the only bathroom in the house.

It looks more like a garden. Talk about bringing the outside in!

This place isn't just a refurbishment job,

it's a major renovation project.

It looks as though the upstairs is in the same state as the downstairs.

Now, in the catalogue there's a statement that I have never seen before

and it's a real reflection of the current state of the money market at the moment.

It says "This property will not be suitable for high loan to value mortgage dependent clients."

Now, that means it's unmortgageable unless you have a large deposit.

Basically, it's cash buyers only for this one.

But if you've got the readies available,

at around the guide price of between 70 to 75 grand,

you'd be getting a pretty decent-sized house.

If you can look past the piles of rubbish, upstairs you'll find two

large double bedrooms and a generous single.

You could move the bathroom up there,

but that would mean sacrificing a bedroom.

But there is an alternative,

I'm just not sure it makes financial sense.

Due to the extent of damage inside here

it might be worth rebuilding this extension completely.

It's worth thinking about applying for planning permission

to also add another storey like they have over there.

You could make the kitchen bigger,

you could move the bathroom upstairs without sacrificing a bedroom,

but you've got to weigh up whether it's cost effective to do so

and, in this climate, probably not.

But you do have a great sized family garden at the back.

Curiously, given the state of the inside,

it isn't completely overgrown.

Hmmm, some investigation is needed.

I found out a little more from neighbour Sarah

who's obviously delighted that this house went up for auction.

It's been the bane of our life since 1999 when the property was vacated.

The neighbour the other side has been maintaining the garden to keep it looking, you know...

Because we were extremely worried about people squatting and fires.

We've had rats, we've had damp,

we've had to have the council in on numerous occasions.

You must be so relieved to think

that somebody's taking over this house!

Oh, I just can't tell you how relieved I am.

We're absolutely thrilled, all of us, all the neighbours are.

The house has been abandoned for years.

It's got rats, a derelict rear extension and an unusable bathroom,

so even at a guide price of 70,000 to 75,000

was this really a good buy?

I asked a local estate agent for the facts and figures.

Currently there would still be a good demand

for a property such as this in good condition

and you would look to achieve

somewhere between £130,000 and £135,000.

With the house guided at 70,000 to 75,000,

that would leave around £60,000

for everything that needs doing here and room for a profit.

With an expected rental income

of around £625 to £650 per calendar month,

you could be looking at a 7% to 8% return here.

This isn't a property for amateurs.

It's in a complete state.

It needs everything doing to it

and that extension will probably have to be completely rebuilt

and, more importantly, it's so bad you won't be able to get a big mortgage on it.

So, who was the buyer who had enough cash to splash on this place

in the auction room?

Lot 17, Anne's Hill Road in Gosport, Hampshire.

This is a terraced house in need of comprehensive refurbishment.

If somebody was to bid the sum of just £60,000.

Is somebody prepared to get me underway at that...

Thank you, sir. 60 I've got.

65? 65,000 I have in front of me.

70,000, sir. 75?

Yeah. 75,000 we've got.

76,000 on the wall here.

Looking for 77. 77,000 seated here.

78 I have got. 79, sir?

I'll take the half at this stage. 78 and a half.

Now back to you at 79. 79,500.

79 and a half he says yes, to.

80,000 the gentleman's on the wall saying yes to.

Now I'm looking for that same. No?

80,000 we have got. New bidder at 80,500 on the back wall.

Now looking for 81. 81 and a half?

81,500 on the back wall.

82,000 we have now.

82 and a half thousand the gentleman comes back with.

83, sir? No.

82,500 on the back wall then, I have for the first time.

82,500 I have for the second time.

82,500 for the third and final time.

Your property, sir, well done. Your number, please?

Coming in right at the end with a bid of £82,500

for that derelict mid-terrace in Gosport was local man Keith.

He's bought this place in partnership with friend Neil and they plan to let it out.

This was Keith's first auction

and it's to be their first joint project.

Have they bitten off more than they can chew?

I met up with them at the property.

-So, guys, what was it that you loved so much about this property?

-The challenge!

The luxury?

-That, too!

-I don't think so!

I mean, you know, you have got no back end of the house.

It's collapsed, almost. You can even see by the washing machine how that's fallen into the floor.

Yeah, years of water damage has come through the roof

and out of the washing machine, but it's all repairable.

As soon as we strip it out we can see how far the damage has gone

and then work our way from there, really.

And what about the fact that, on the details of the auction catalogue,

it mentioned, you know, it's basically for cash buyers only.

If it was mortgageable I honestly believe it probably would have gone

for a considerable amount more money than we actually obtained it for.

So, you're quite pleased you got it for 82 and a half?

-Yes, we are, very.

-That really is quite good value for money

when you think it's a big house, isn't it?

It's a good traditional town three-bedroom property.

They're much sought after in the area

and by putting it back with our budget

we think we could turn it round,

put it back out on rent and be very pleased.

Keith and Neil would have gone up to a maximum of £85,000 at the auction.

That means they can allow themselves slightly more

than their initial 30 grand renovation budget.

But have they got the experience to take on a project like this?

I've done a few. I'm a carpenter by trade and I can do most things,

so that adds and keeps the costs down obviously as much as we can.

-So, that would be my main input, I think.

-What about you?

Don't ask me that question! My strengths, I don't know?

Project management, shall we say?

No, we both have got a skill of hand,

so between us it shouldn't be a problem.

What plans have you got for the house?

Obviously putting everything right that's wrong.

Are you intending on doing building work?

No real build work other than the roof repairs at the back

and also a small roof repair at the front of the property.

Everything's going to have to be taken back.

Everything's going to be replastered, rewired, new central heating.

We're going to convert this room back into two receptions

because we think that suits the rental market specifically.

Now, what about the thought of possibly having a double storey extension out the back and...?

It wouldn't value high enough for us to do.

It would cost too much, so it's not worth doing, in our opinion.

-And are you going to keep the bathroom downstairs?

-Yes.

Because you need the three bedrooms to let upstairs?

We need the three bedrooms upstairs, yes, but also we are looking

into putting just a toilet upstairs for the children.

Now, that is a good idea.

The guys are obviously looking at this as a family rental so a loo upstairs will really help.

They've set a target of three months to do all the work, but there's one thing that really worries them.

-The rats.

-Rats.

No, I think once we actually start the work probably the rats will...

-Vacate the property.

-Vacate the property.

-We're hoping they will do, anyway!

-They'll move on to another location!

-Yeah.

-That's what we're expecting.

Good luck. It's going to be really exciting

seeing the end product here.

-Really nice to meet you today.

-And you. Thanks very much.

-Thank you.

This is Neil and Keith's first development project together and they've picked a pretty major one!

Will they be successful or will this cash buy become a money pit?

Find out later in the programme.

Still to come, there's work to do at this three-bedroom semi in Roundhay, Leeds.

Well, that needs sorting out, doesn't it?

We return to Gosport to find out what's made the neighbours so happy.

To see it evolve into what it is today is lovely.

But first, in Fenton, has Dan managed to deal with all that woodchip wallpaper?

It's a hassle to get off but, stick at it, get your teeth into it.

Two-bedroom terraced houses like this one in Fenton in The Potteries

are the life blood of the British property market.

They're ideal for first-time buyers and renters alike

and you sense that the market may have started moving again

when a property developer like Kevin was prepared to pay £54,500

for a house that was guided at just 35,000.

Kevin had a budget of 8,000 to 10,000 and a timescale of eight weeks to turn this place around.

Somehow he'd managed to persuade his son and trained joiner Dan

that removing all the chipped wallpaper was his responsibility.

There is wood in it, he is a joiner!

-You really drew a short straw there, didn't you?

-I know.

So, ten weeks on, how have Dan and Kevin got on?

The property was already double-glazed,

so there wasn't much to do at the front,

but they have fitted a new front door

which leads into a transformed living room.

The woodchip has been replaced with freshly plastered walls and accent wallpaper.

Where the old nondescript fire once stood

there's now a lovely feature fireplace

created from those old floor tiles.

And the drab old carpet has been replaced with new laminate flooring

which carries on into the back reception.

As you can see now all the decoration is completed.

It's all been stripped to the bare bones.

New floor, concrete floor, damp course, laminate flooring.

All nice decoration, doors throughout, smoke alarms,

and you come to in here, a complete kitchen here.

A good upmarket kitchen, integrated appliances.

We've gone over the top a little bit with lighting etc underneath,

but when you're doing a job like this it's no big deal.

And, yeah, it's looking good.

Through the kitchen at the back,

the bathroom has been completely refitted with a white suite,

tiles and taps and there's a new pitch roof.

Dan views the latter with great pride.

Obviously building the rafters and the joists

and then obviously putting the felt on after

and across for the tiles to hook on.

We've finished it off now, it looks a lot neater, a lot tidier

and within keeping of the other houses,

but, you know, I'm really proud of that job. It looks really nice.

But, of course, the first thing that Dan had to tackle was all that woodchip wallpaper.

Well, nearly all.

The only place we've got any woodchip is on the stairs,

but we left that for a reason.

It was because it's durable if it gets any knocks.

But, apart from that, everywhere else has been stripped total.

It sounds like Dan has taken it all in his stride.

Well, it's just something you have to do, isn't it, really?

We got an industrial steamer and, you know, going into every room with it

and it took a couple of days, but, you know, a good scraper and a good steam and its...

And the whip out.

The whip!

Well, I think Kevin's joking!

But it sounds as though he's been a pretty hard taskmaster.

It certainly shows in the quality of the end result, though.

When you're learning a job you make mistakes

and Dan knows that and he certainly gets told when he does,

but I can see over the last six months progression

which is what we're after and what he should be after

and eventually I won't have to look over my shoulder and check his work, etc.

It's one of them things, if you get told what's wrong

you can put it right and you don't do it wrong next time,

so it's good experience.

It's like free training, really.

He should be paying me!

Hmm...Somehow I don't think Dan will go for that idea,

but the experience he's gained here will certainly come in handy.

It's been a real family project because younger son Matt has also had a hand in the plumbing.

He's been here two and three days a week.

He's done a bit of plumbing, but he's also got his hands dirty

and doing a bit of labouring work and helping in and mucking in

which is what we all do, you know?

-It isn't just doing your trade, is it?

-Yeah.

It's doing the lot, really, when you're doing this project.

Although Kevin originally budgeted 8,000 to 10,000 to do all the work,

the final figure, including his other fees, is just over 13,000.

That takes the total spend,

including the £54,500 purchase price, up to around 68,000.

So, what will it be worth?

I've invited two local estate agents

to take a look at this refurbishment project

and it seems as though Kevin and Dan's hard work

is being well received.

Wow! It was a really, really smashing job

in a relatively short space of time. I'm most impressed.

I think they've done a fantastic job on this property.

They've specced it up to a really high spec.

Good finish throughout.

I think they've put a lot of time and attention on this property.

For example, in the kitchen they've put the detail in,

they've put in under lighters underneath the wall units,

they've put pelmet lighting, integrated pelmet lighting which is quite a nice feature.

And the appliances look as if they're a little more than the basic ones,

so it's nice to see that somebody's taken the time to think it through and put a bit more detail in it.

But have they spent too much?

Remember, Kevin's total costs were around £68,000.

In today's current market I would value this property at £69,500.

In the market that we're in we're really topping out at 69,950,

but I have to say I would be really tempted to push this a little further

because of some of the detail that's been added that I don't normally see.

I would be suggesting an asking price on this property of somewhere in the region of 72,000.

So, this father and son team could only make a pre-tax profit

of between £1,500 and £4,000.

It's a little bit lower than I thought, but the market does reflect it at the moment.

I mean, they were selling in the mid 80s in this street a couple of year ago.

Kevin's plan always was to rent this place out, at least in the short term.

For the condition of this property,

I believe you would charge a premium at 410 per calendar month.

Generally speaking, £425 per calendar month

should be achievable easily on this property.

Those figures would give Kevin a return of around 7.5% on his £68,000 investment.

Not bad, but there's even better news because they've already got a tenant lined up.

We got people knocking on the door asking what we were doing with it

and before I knew it we got people who were really interested,

and in the end we've secured a nice mature couple

who I think will blend in well with the neighbours,

which is a big thing for me as well,

and the rent will be more than what we've basically just been told

so it all sounds good in that respect.

I'm quite happy with the end result.

With this development out of the way,

Kevin has already turned his attention to two more,

so it's just as well that he'll have Dan and soon Matt to help out.

This is Roundhay, an affluent suburb of Leeds,

and the name Roundhay comes from originally round hog

which basically means round hunting enclosure or deer park,

but I'm hunting for bargains.

What a great place to start!

This area was once hunting land belonging to the de Lacy family of nearby Pontefract Castle.

Later it became first mining and then farming land.

Today Roundhay Park is one of the largest city parks in Europe.

So, not surprising this is a very desirable area

and the houses round here reflect that.

They're gorgeous, very individual.

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

which had a guide price of 130,000 quid,

oh, yes, it's time to get excited!

And, you know what? From the outside this place looks pretty good.

Those bay windows give it great character and there are some lovely details on the other windows, too.

Yes, the woodwork needs attention and that might not come cheap, but it's still a fantastic property.

Let's find out if the inside matches up.

So, what have we got? Well, you know what?

I'm a great believer in first impressions and I like this place.

I like the light in this hall area,

lots of windows and the stained glass is quite cute.

It's a fairly standard layout.

We've got stairs up to the bedrooms there and this large hall area,

though, gives it a really nice sort of non-cramped feel.

Front room there, fireplace, big bay window which, again, gives a really good feel to it.

Kitchen, wow! OK.

Yep, that's going to need a bit of work, but, you know what?

You could put your own stamp on that and, you know,

make a huge difference as we know in terms of the value of the house.

And then this rear sitting room, it's a good sized space.

Again, an open fire there which is good. But look at this, fantastic!

Somebody's already got big doors out on to the garden.

Obviously they need replacing, but all the structural work's been done.

It's a great house.

Out at the back there's a good-sized garden, too.

Plenty of room for kids to play with space left over.

That gives me an idea.

I think this house would really benefit from exactly what the next door neighbours have done.

Stick a conservatory on the back and it would give you that extra space.

Now, this is a perfect family home, so that could be a kids' play area

or just somewhere to come out and enjoy the garden.

It's not going to cost too much and it would really enhance the house.

While we're about it, you can see that the neighbours have also added

a dormer loft conversion, presumably to create a fourth bedroom.

Time to find out what's upstairs, I think.

You know, the thing that really strikes me about the house

isn't necessarily the rooms,

it's the hallway and the landing areas here.

They're very big, which you could argue is a bit of a waste of space,

but I think it gives the whole house a lovely open feel.

It's fantastic. I mean, things like this on the staircase.

Look at this beautiful stained glass window.

And you do need to replace all the windows,

but whatever you can do to keep features like that it's got to be done.

But what have we got up here?

Well, three bedrooms, reasonable size.

One fairly small one, but two good sized doubles.

And then we've got a bathroom and separate loo.

Now, there's a big debate,

do you knock those two together to create one room?

I say not. This is a family house and, really, if you've got a family,

it's great to have a separate loo and a separate bathroom.

Oh, dear.

Right, now, the whole house, as you can tell,

is in need of redecoration.

That is not a problem, but that potentially is.

Now that, as far as I can tell,

is a lath and plaster ceiling and it's cracked, as you can see.

Now, my big concern is whether or not

that's because there's been some water ingress above it.

There is only one way to find out.

This could be messy.

Yep, well, that needs sorting out, doesn't it?

Oops! Well, there's definitely some work to do on that ceiling,

especially now!

I just hope that the roof above is watertight,

otherwise it's one more thing to add to the list here.

What will a local estate agent make of this as an investment project?

It's a very run-down property

which is in need of some large modernisation,

gas central heating, new bathroom suites,

new fitted kitchens, a rewire and double glazing.

And probably a new damp course, too, all of which will set you back

somewhere in the region of £20,000 to £30,000.

Add that to the £130,000 guide price

and you're looking at a total investment of at least 150,000,

but it could be well worth it.

It would stand in the region of £269,000.

That could mean around £100,000 profit

if you picked it up at the guide price.

With rental values in the region of £750 per calendar month,

you could also make a decent return on this if you let it out.

So, there you have it.

Now, have I taught you enough over the years

of Homes Under The Hammer

for you to know this is an absolutely fantastic opportunity?

Great location, wonderful house.

Yes, it needs a bit of cosmetic sorting out, kitchen, bathroom,

yadda, yadda, yadda, not a problem,

and for a guide price of 130,000 quid

this was a fantastic opportunity.

Who spotted it at the auction?

Lot number 80 is 20 Keddlestone Road in Leeds 8.

The vacant three bedroom semi-detached house

in need of renovation.

£130,000 to start things off?

120 then, may I say? 120?

Thank you, sir, 120 opening bid. I'll take yours. 120. 121.

It's £120,000 then we have.

121 I'm looking for. 121, thank you, madam. 122, then.

122. 123. 124.

124. 125. 126. A brand new bidder.

Thank you, sir. 126. 127. 127. 128.

129? 130.

131. 132.

133. 134. 135. No? Shakes the head.

It's 134. Gentleman seated, it could be yours, sir. 135 anywhere else?

Are we all done then at £134,000? Sorry, madam, didn't see you.

135, then we have seated.

136 anywhere else?

It's 100... 136. And lady is back in.

136. 137. 138.

£137,000 then we have.

138 anywhere else? All done then at 137?

138, she's back in.

I thought you might. 138. 139?

139. And 140, round it up. 140. 140 she's got. 141 then?

140. No? £140,000 and we have the lady at the back.

Are we all done then at £140,000?

I'll sell it to her then at 140.

For the first time at 140.

Second time.

Third and final time. Fair warning. Thank you, madam.

Well done.

I'm surprised it took so long for this one to get going, but the new owners must be delighted.

For a bid of 140,000, just £10,000 over the guide price,

Lakvia and Santok have picked up a bargain, I reckon.

Although they're both originally from India,

Santok has been living in the UK since he was eight years old.

He moved to Leeds 26 years ago when the couple got married

and they've been buying property to rent ever since.

I met up with them at the house to hear about their plans.

Santok, Lakvia, lovely to meet you both.

I love this house! Why did you want to buy it, apart from the blindingly obvious that it's fab?

Well, we just wanted to grow our business.

We were looking for another investment, so we went to buy,

really, another house on the auction that day, than we thought,

"Well, we'll have a look at this one,"

because one of my architects pointed out to us this could be a good buy.

Although they didn't see the inside of the property before the auction,

Santok did check the outside and, crucially,

the property values in the area.

They also had their architect's advice to go on, so they were happy

to bid up to £150,000 on auction day if necessary.

So, having seen it inside, what do you think?

Well, we think it's not too bad.

We've bought a few houses before, they're worse, you know?

One house, we bought it, there was no bath in the bathroom.

The bath in the kitchen!

Yeah!

When it comes to developing, Santok and Lakvia are old hands.

They have around 20 properties they rent out,

including four shops and a number of flats and houses.

But more recently they've also bought a pub which they now run.

So, Santok is a landlord in more ways than one!

And some of his locals even do building work for him.

I employ different people, joiners, brickies, we've got a few come in the pub they do building work for me.

-Before they've had a drink, hopefully.

-Yeah, yeah!

Well, they always work before!

So, tell me exactly what you're going to do with the place.

Well, we're going to put the central heating,

brand new central heating in. Kitchen, new, and a bathroom.

-Bathroom, we may knock the toilet, you know, the toilet is separate.

-Yes.

-We'll knock it all in one.

-Really?

-Because I don't think there's a bath in there,

you know, there's just a shower? So it needs a proper bathroom.

I see Santok's point, but I think with a bit of adjustment,

it would be possible to get a bath in here

and still have a separate toilet.

Then in terms of the rest of the house?

Then we're going to redecorate the whole lot,

plaster the ceilings wherever needs it.

Yes, there might be a bit of a hole in one of the ceilings,

-I don't know how that happened, but...

-Well...

-Sorry.

-It doesn't matter.

-I thought I'd better come clean about that.

We'll send you the bill later!

Ah, well, moving swiftly on!

Santok and Lakvia also have plans to add a small extension to increase

the size of the dining room and possibly a dormer at a later date.

I'm not sure it's the best option in the current climate,

but the couple are planning to hold on to this property in the long term,

so it may add more value by then.

They've set themselves a £10,000 budget and an eight-week timescale to do all the work here.

It's not much, but Santok will be doing a lot of it himself if he can take time off from running the pub.

So, Santok and Lakvia are securing themselves a great house for 140,000 quid.

See, you've got to get yourself down to the auctions.

I'm a little bit concerned about what they're going to do

in terms of knocking the bathroom and toilet together,

I don't think that's the right thing to do.

And, I have to say, over the next few months

I think a bill might be arriving on my doormat for that ceiling repair.

Find out what happens later in the show.

Well, months have passed.

Have our purchasers' plans hatched?

-Have they built up a nice little nest egg or have they had rotten luck?

-Let's go back and find out.

When friends Neil and Keith decided to embark

on a property developing partnership together

they chose a real challenge to get them started.

This three-bed mid terrace house in Gosport had been empty for so long

that the roof in the rear extension had completely given way.

The one over the bay at the front was rapidly following it.

It was full of clutter and there were signs of a rat problem,

but Neil and Keith still paid £82,500

for this unmortgageable property at auction.

They planned to spend another 20,000 to 25,000 to return it to its former glory.

They'd set themselves a three month target to do all the work,

but nearly nine months later

the house is only just nearing completion.

So, why the delay?

The weather wasn't particularly good over the winter.

We didn't really have a tight timeline.

Keith was working on sites around the country

and so what we've done is let time go on a little bit

and we started as the spring come along

and the warmer weather come along

and we've actually now started to enjoy it.

It's very hard to work in a cold, empty house.

This place had been empty for so long

that the gas and electrics were no longer connected.

The guys had to have the road closed outside in order to get a new gas meter installed.

Even now they still have a few days to wait

until a registered plumber can come

and finish installing the central heating.

But one of the first things that had to be done was to replace the roof

at the back and make sure that the place was watertight.

Well, this is obviously the bathroom ceiling that was originally on the floor.

We've had a new roof put on, replaced the ceiling,

we've dry-lined the walls, new bathroom suite

and we've got a few pipe boxings to do,

retile it and then some floor coverings and then we'll be done.

With the new roof and new windows the property is finally watertight again.

The guys have been able to keep most of the existing brickwork here,

but the floors were obviously going to be a bigger problem.

Not only did we just take the floors up,

we cleared out underneath all the rafters.

All the beams were replaced and then new floors put down.

And then we started on the walls upstairs, took out a few of the walls up here, like this one.

All the ceilings had to be taken down because they were all lathen plaster,

then worked from the top downwards and as we were going,

putting all the new electrics in, the new central heating,

all the wires, all the pipes were all hidden underneath

the floor joists right the way down.

And then just worked from top to bottom pretty much.

They have made some small changes to the layout along the way.

There's a new toilet upstairs created by using some of the space in the back bedroom.

With the main bathroom still downstairs,

that's really going to help

and still leaves them with three good sized rooms here.

Don't be fooled by the table and chairs upstairs

because downstairs they've reinstated the dividing wall

in the old reception room to create a separate living and dining room.

They've also had to reinstall the chimneys here.

A couple of chimneys had been removed on the ground floor which didn't support...

They didn't remove them on the first floor,

so we've reinstated the chimneys as opposed to taking them further out,

give it a little bit of character.

In the living room the guys have integrated wiring for a TV in that chimney,

and they've done the same thing in almost every other room, too.

They intend to rent this place out

and have gone for a neutral but durable finish

hoping to maximise the rental return.

Of course, the kitchen is no exception.

Well, what we've actually done in the kitchen so far

is we've actually changed the cooker

from one side of the kitchen to the other.

We've had the hob and the oven reinstated with an extraction system.

We've taken out the washing machine from the kitchen and put a dishwasher in.

We've now made a utility area behind the kitchen before you go into the bathroom

for a washing machine and dryer with another extraction system outside,

and then leading into the bathroom.

Let's face it, this place couldn't have been much worse when Keith and Neil bought it,

but the guys have done great things with it which has been a huge relief to the neighbours, too.

For the last ten years the property was in a terrible state.

We had damp, we had rats, we had to call the people out from the council

and to see it evolve into what it is today,

although I know there's more work to be done, is lovely,

and I know all the neighbours feel the same. It's so nice to see.

In spite of the extra effort they've gone to here, the guys have actually stayed pretty much on budget.

Keith took charge of a lot of the work while Neil project managed

and helped out, so they've spent just under 25,000 so far.

They expect to go slightly over by the time they've finished.

Added to the original £82,500 purchase price

that takes the total spend up to just under 110,000.

But what's it now worth and did they go too far?

Nine months on,

time to find out if the market has changed significantly in Gosport.

What will two local estate agents

make of all Keith and Neil's hard work here?

The property is obviously a work in progress.

The standard is to an extremely high standard,

far exceeding what we usually see

when we go and see a renovated property.

Looking round the property and what they've done,

the improvements they've made: the kitchen, the bathroom, the upstairs toilet,

I can't think of anything I would have done any differently to what they've done.

Well, it's the first time I've seen the property

and first impressions are it's a nice sized home.

Certainly it's been refurbished to a good standard.

A big thumbs up for the property, then, but has all that extra effort paid off?

They have a tenant lined up to pay £750 per calendar month.

Typically properties in this area are letting for somewhere

in the region of £700, £725 a calendar month.

This may fetch a little bit more

because of the quality and standard of finish,

plus also it's, essentially, internally a new property.

Purely for the size and the standard of finish,

I would be looking between £725 and £750 per calendar month.

750 is what we've got, so we're happy with that, yes.

Neil and Keith have two weeks to get this place finished before their new tenants move in.

If they stay on budget then that 750 per calendar month

will give them an 8% return for their £110,000 investment.

But how much could they get if they decided to sell?

I would put this property on the resale market for £135,000 to £140,000.

I would put this poverty on the market for an asking price in the region of 139,950.

Although it's nice to hear that it's worth £135,000 to £140,000,

we're quite happy to go with the rental.

That top price of 140,000 would bring in about £30,000 pre tax profit,

so all round it's a great result for their first joint project

and definitely something to build on for the future.

Back to Roundhay in Leeds now to find out how Santok and Lakvia

have got on with their three-bedroom house.

When they bought it for just £140,000 at auction

I think they picked up a real bargain,

especially when you consider that a similar property

can go for 250,000 and up in this area.

But there was a lot to do, including that ceiling in the back bedroom.

Yep, well, that needs sorting out, doesn't it?

Well, as a pub and property landlord,

Santok reckoned he could get hold of all the extra labour he needed

to transform this place within eight weeks and for around £10,000.

But nine months on and when you walk up to the front of the house

it doesn't seem like much has changed here.

Slip round the back though and that scaffolding is a sure sign this place is undergoing a lot of work.

It appears that Santok and Lakvia have decided to add

that single storey extension they were considering.

This extension has taken us a long time

and the reason is a roof leak up there.

Now that's fixed, so there's going to be an open plan

kitchen and dining and living room here.

So, the couple have created a space that will become a new kitchen and dining area here,

leaving the old kitchen to be converted into a utility area,

but extending the property has also meant extending their schedule

from eight weeks to eight months.

Well, the project is taking its time because we have other properties.

Sometimes a house comes empty,

we break away to go and fix that to let it out straight away.

We've built an extension and that's taken the time.

Prior to that, it took three months just to get the planning permission.

With major structural changes planned, Santok didn't feel

it was worth starting on any other parts of the property.

There were 50 bags of cement here, you know? Tons of sand outside.

Then we were going to do plastering and plastering flies everywhere,

so that's one of the reasons

we didn't start decorating anywhere else.

But they have finally begun the rest of the work.

There are preparations for new central heating, electrics and...

the repair job on the hole in the back bedroom ceiling!

It's all done, yeah. All fixed, yeah. All fixed.

We had to paint it five times.

With 20 properties to rent out and a pub to run,

it's hard to see how Santok has found time,

but he has done a lot of the groundwork and woodwork

on the new extension himself, with Lakvia helping out.

That has obviously helped keep their costs down.

So far we've spent about, roughly, £8,000

and we may need about another £1,500 to do the bathroom,

so I think it's on... The budget is on line.

Wow! To put everything right in this place and get a new extension for under £10,000

sounds like a major achievement.

I'm worried that it may mean compromising on the finish

of this property in a good area.

Having said that, the couple always planned to keep this long term

as a nest egg for their family.

They have a tenant lined up

who's prepared to pay £700 per calendar month,

so their main priority is to get the place finished as quickly as possible.

On a total investment, including fees, of around 155,000,

that rental will give them approximately 5% return,

but is it enough for this part of Leeds?

What advice do two local estate agents

give on the work that's now underway?

People that buy in Leeds 8 are looking mainly for the schools,

but also for properties that are in good decorative order

that they can move straight in to.

It's not been carried out to a level

where a family would move in themselves.

It's been carried out so a tenant would live in it themselves.

It's not been fully double-glazed,

the chimney breasts have not been taken out.

I believe there will be a new bath suite fitted, new fitted kitchen.

For letting purposes there will be carpets,

plastered walls and basic rental furniture.

Now, that might not meet the expectations

of many tenants in this area,

but remember Santok and Lakvia have a tenant

ready to pay £700 per calendar month.

At the moment there are a lot of accidental landlords

because of the marketplace,

so the better decorative order it's in

the easier it will be for them to rent it out.

I think they could probably achieve about £800 a month

if it's in good decorative order.

The rental figures of this property would be in the region of £750 per month.

Well, I mean, I knew the rental values would be about 750 to 850,

but because the tenant we assessed he was good,

we said to him, "You know, what do you want to pay?"

So, the renovation is geared to the expectations and budget of the new tenant.

With all their costs to date the couple have spent around 155,000.

That could increase before the renovation is over,

but it might be worth a lot more.

The resale value of this property would be in the region of 270.

I would say the ceiling probably is 250,000.

So, even at the lower estimate of 250,000

that would still mean a profit of nearly £100,000

to go into the family business.

We paid only 140, we spent, what, about 15,000?

We've made a lot of money on that, you know? I think it's a bargain.

Me too, Lakvia. It just goes to show what you can find when you go shopping at property auctions.

Well, we hope we've been of help today, guiding you and maybe inspiring you along the way.

-See you next time for more Homes Under The Hammer.

-Goodbye.

-Goodbye.

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